26 June 2026
For employers or clients providing expenses and benefits the deadline of the 6 July 2026 is fast approaching to report Class 1A National Insurance contributions via the P11D(b), and complete P11D submissions for any items not already payrolled. Whether you are new to payroll or just need a refresher on the rules, going over how to file these online is useful.
Payrolling
‘Payrolling’ is where an employer is already reporting expenses and benefits in kind through their payroll software and pay tax on them throughout the year. In this case, they do not need to report expenses and benefits for each employee at the end of the tax year, if all their expenses and benefits are payrolled. But it is essential that employers still report the Class 1A National Insurance owed by submitting an online form called a P11D(b).
What is a P11D?
A P11D return is a statutory requirement where employers have provided taxable expenses and taxable benefits in kind to employees or directors, in a tax year, which have not been included in wages, i.e. they have not been ‘payrolled’, or covered by a PAYE Settlement Agreement (PSA).
Reportable Items
Expenses and benefits in kind reported on a P11D are generally items that a company pays for that the employee benefits from. This may include company cars and fuel, private medical or dental insurance, vouchers and non-cash awards, loans, assets transferred or made available for personal use, subscriptions and memberships, business travel or entertainment expenses. Each are treated differently, you can use HMRC’s Expenses and benefits: A to Z guide for further details on what to report and pay, as for certain benefits it is necessary to use a calculation to identify the cash equivalent of the benefit provided. This broadly means the cost of providing the benefit to the employer (or another provider), minus any amount the employee makes good.
If the period to which the benefit in kind relates to does not align with the tax year, gather all the invoices that cover the whole year. The total amounts per person on the invoice can be divided by 365 to get a daily rate for each bill, then work out the cost for the period 06/04/2025 – 05/04/2026. Once you have the cost for each person, check the overall total matches the cost for the year.
Exemptions
A benefit does not necessarily need a P11D just because it’s provided. Exemptions can apply for items such as:
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business travel and subsistence
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certain mobile phones and phone bills
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business entertainment expenses
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eye tests
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certain staff events within HMRC’s exemption limits
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uniform and tools for work
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trivial benefits.
However, to qualify, the employer must be either:
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paying a flat rate to the employee as part of their earnings; this must be either a benchmark rate, or an employer can apply to use a ‘bespoke’ rate approved by HMRC
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paying back the employee’s actual costs.
An exemption is unnecessary if paying HMRC’s benchmark rates for allowable expenses.
Tax Liabilities
Once benefits in kind are declared to HMRC in the P11D return, the tax due is then collected from the employee through their tax code (P800) or self-assessment. Employers must also use an online form P11D(b) to report the total value of expenses and benefits they’ve provided, and how much Class 1A National Insurance they owe and which is payable by the employer, which is calculated at 15%; there is no employee NICs liability. This return must be completed and submitted after the P11D returns.
Employers need to submit a P11D(b) form if:
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they have submitted any P11D forms
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they have paid any employees’ expenses or benefits through their payroll
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HMRC has asked an employer to file a P11D(b) form, by sending them a notification to do so
Employers only need to tell HMRC that they do not need to make a return if HMRC has sent a notice to file, or a reminder to file a P11D(b), but they have nothing to declare. Employers can tell HMRC by completing a no return of Class 1A National Insurance contributions form.
Electronic payments for Class 1A NICs declared on the P11D(b) return for the tax year ended 5 April 2026 must clear into HMRC’s account by 22 July 2026. On payment, employers must use the correct payment reference which is their 13-character Accounts Office reference followed by 2613. The reference should have no gaps between the characters.
How to submit a P11D or P11D(b) form
It is good to refer to receipts or invoices for the benefit in question, for example, health insurance. These should be kept for strong record keeping. The employer will need the cost for each person.
Once you are happy to proceed, the next step is to add the cost to each record either in the payroll software or on HMRC’s PAYE Online Service. An employer with fewer than 500 employees can either use payroll software to submit their P11d and P11D(b) returns, or fill in and submit the forms through HMRC’s PAYE Online service. However, an employer with more than 500 employees, must fill in and submit the forms through their payroll software. Please be aware that HMRC will only accept paper forms if an employer has stopped trading. Next, add the details to the P11D(b) return, Class 1A NICs should be calculated at a rate of 15% of all relevant cash equivalent amounts. When submitting P11Ds and P11D(b), make sure that the business name is entered exactly as registered, without any abbreviations, punctuation or alterations. All P11Ds and P11D(b) for the 2025 to 2026 tax year must be filed online and at the same time.
If the employer uses payroll software to do this, in most cases it will generate a P11D form for each employee, which must be issued to them by the 6 July. However, if using the HMRC PAYE Online Service, it is necessary to save the blank P11D for tax year 2025/26 and use this to create PDFs for each employee to issue.
If benefits in kind and the taxable expenses have been payrolled – the P11D return does not need to be completed. Skip this stage and go straight to completing a P11D(b) and declare the Class 1A due to be paid. This liability must be paid by the 22 July 2026.
Correct an error or report earlier years
If, after submitting the P11D returns to HMRC, you later realise there were errors or omissions in the data, you must resubmit a revised version of the return which includes all the benefits and expenses for the tax year, not just those being amended, fill in both online correction forms:
For example, if the employer has submitted a P11D showing a medical benefit of £300 and a car benefit of £2,100. The car benefit is correct, but the medical benefit should be £500. Submit a P11D correction form showing both the medical benefit of £500 and the car benefit of £2,100. If correcting a P11D(b), include the total amount of Class 1A National Insurance payable, not the difference from the previous version. Therefore, if submitted a P11D(b) showing £10,000 of Class 1A National Insurance was payable but it is realised £500 must be added. The amended P11D(b) should show the amount as £10,500.
Penalties
HMRC will charge penalties monthly and issue penalty notices each quarter until a return is received, or, if an employer carelessly or deliberately gives inaccurate information in the tax return that results in an underpayment of tax or over-claiming of tax relief. Late submission or no return may result in a penalty of £300 per form, £60 a day thereafter and an incorrect form may cost the employer up to £3,000 per form. Comparatively, late or no return of a P11D(b) form will cost £50 per block of 100 employees, employers will also be charged penalties and interest if they’re late paying HMRC. If an employer incorrectly processes payrolling of benefits, this could cost up to 100% of potential lost revenue. With all of this in mind, if an employer with 50 P11D returns, submits these forms late, this could result in a penalty worth £15,100.
Record keeping
Lastly, ensure strong keeping of records is maintained for at least three years from the end of the tax year they relate to. Employers must keep record of:
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the date and details of every expense or benefit provided
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any information needed to work out the amounts put on the end-of-year forms
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any payment employees contribute to an expense or benefit.
You should also keep any correspondence you have with HMRC.
Good record keeping may also assist in the transition to mandatory payrolling, allowing you to more accurately estimate benefit values before they are known.
For anyone who wants further assistance with the move to payrolling, please see our brand new one-hour webinar, Payrolling Benefits: From P11Ds to Mandatory Payrolling, and book your place today!
Information provided in this news article may be subject to change. Please make note of the date of publication to ensure that you are viewing up to date information.
