P11Ds Are Being Phased Out – Mandatory Payrolling of Benefits from April 2027

HMRC is introducing a major change to how employee benefits are reported. From 6 April 2027, most taxable benefits will need to be processed through payroll, bringing an end to the traditional P11D reporting process for the majority of employers.

Under the new rules, the value of taxable benefits will be incorporated into employees’ pay each month, with tax collected in real time. This means benefits will be taxed as they arise, rather than being reported and taxed after the end of the tax year.

As a result, employers will no longer be required to complete and submit P11Ds for most benefits.

We will be supporting all affected clients through this transition and will be in touch from February 2027 with detailed guidance, including any actions you may need to take.

Key Milestones to Be Aware Of –

• February – March 2027

We will contact you to confirm which benefits are currently provided to employees.

• April 2027

Relevant benefits will be included in payroll for the first time under the new system.

• April – July 2027

Your final P11D will be prepared, covering the tax year ending 5 April 2027.

If you would like to start preparing now or review your current payroll processes, please contact our Payroll Manager, Dianne Bradshaw, who will be happy to assist.