If you give your team anything beyond their salary — a company car, private medical cover, a staff gym membership, an interest-free loan — you may have a reporting duty to HMRC that’s easy to overlook. That duty is the P11D, and for small employers without a dedicated payroll department, it’s one of those obligations that can quietly turn into a penalty if it slips through the cracks.
The good news is that the P11D is far less intimidating once you understand what it’s actually asking for. This guide explains what a P11D is, what counts as a benefit in kind, the deadlines and costs involved, how to file, and the significant change on the horizon that every small employer should be planning for now.
The figures and rules in this guide apply to the 2025/26 tax year. Tax rules change frequently, so always check the current position with HMRC or your accountant before filing.
What is a P11D?
A P11D is an annual form employers use to report the taxable benefits in kind and certain expenses they’ve provided to employees and directors that haven’t already been taxed through payroll. You complete one P11D for each employee or director who received reportable benefits during the tax year.
The form tells HMRC the “cash equivalent” value of each benefit, so the right amount of tax and National Insurance can be collected. HMRC typically adjusts the employee’s tax code to recover the income tax due on the benefit, while the employer pays a separate National Insurance charge (more on that shortly).
It’s worth knowing the P11D has a partner form:
- P11D — one per employee or director, listing the benefits they received.
- P11D(b) — one per employer (per PAYE scheme). This is your declaration that all P11Ds are complete, and it calculates the total employer National Insurance owed on the benefits. You need to submit a P11D(b) even if you’ve been payrolling benefits, because that’s how the National Insurance is declared.
What are benefits in kind?
A benefit in kind (sometimes called a “perk”) is something of value you give an employee that isn’t cash pay. Because it still has a monetary value to the employee, HMRC generally treats it as taxable.
Common reportable benefits include:
- Company cars and vans available for private use, plus fuel provided for private mileage
- Private medical and dental insurance
- Interest-free or low-interest (beneficial) loans over £10,000
- Living accommodation provided to an employee
- Gym memberships
- Non-business travel, entertainment or assets made available for private use
Which benefits don’t need reporting?
Not everything you provide is taxable. Several benefits are specifically exempt, and reporting them would be a waste of your time. Exemptions include:
- Trivial benefits — a benefit costing £50 or less that isn’t cash or a cash voucher, isn’t a reward for work or performance, and isn’t part of the employee’s contract. A typical example is a small birthday gift or a modest festive hamper. (Note: directors of close companies have an annual cap of £300 on trivial benefits.)
- One mobile phone per employee
- Workplace parking
- Employer pension contributions
- Business expenses already covered by HMRC’s exemption for paid or reimbursed expenses
- Certain work-related training and welfare items
If you’re unsure whether a particular perk is taxable, it’s worth checking before you assume — getting the classification right is where small employers most often trip up.
P11D deadlines and key dates
The P11D operates on a fixed annual timetable. For the 2025/26 tax year (which ran from 6 April 2025 to 5 April 2026), the dates are:
| Date | What’s due |
| 6 July 2026 | File your P11D and P11D(b) forms with HMRC |
| 6 July 2026 | Give each affected employee a copy of their P11D information |
| 19 July 2026 | Class 1A National Insurance must reach HMRC (if paying by post) |
| 22 July 2026 | Class 1A National Insurance must reach HMRC (if paying electronically) |
Don’t overlook the requirement to give employees their own copy of the information by 6 July — they may need it for their own tax return, and it’s a legal obligation, not a courtesy.
How to file a P11D
Since 6 April 2023, HMRC no longer accepts paper P11D or P11D(b) forms. All submissions must be made online, using one of two routes:
- HMRC’s PAYE Online service for employers (or the equivalent service for agents) — suitable if you’re filing a small number of forms yourself.
- Recognised commercial payroll software — most payroll packages can prepare and submit P11Ds directly.
In practice, the process runs like this: identify everyone who received a reportable benefit, calculate the cash equivalent value of each benefit using HMRC’s valuation rules for that category, complete a P11D for each person, prepare the P11D(b) summary, and submit everything before the deadline. Keep your forms and the calculations behind them for at least six years in case HMRC queries them.
Class 1A National Insurance explained
When you report benefits on a P11D, you as the employer owe Class 1A National Insurance on their total value. This is an employer-only cost — it isn’t deducted from the employee, and it’s separate from the income tax the employee pays through their tax code.
For 2025/26, the Class 1A rate is 15%, up from 13.8% in previous years following the increase to employer National Insurance announced in the Autumn Budget 2024. The same 15% rate applies for 2026/27.
The calculation is straightforward: add up the cash equivalent value of all benefits reported across every P11D, and multiply by 15%. That total is declared on your P11D(b) and paid to HMRC by the July deadline.
A worked example for a small employer
Imagine a small company with the following benefits in 2025/26:
- A director’s company car with a cash equivalent value of £6,000
- Private medical insurance for three staff at £450 each — £1,350
The total value of reportable benefits is £7,350. The Class 1A National Insurance due is 15% of that figure:
£7,350 × 15% = £1,102.50
So the company would file a P11D for the director and each insured employee, declare £7,350 on the P11D(b), and pay £1,102.50 in Class 1A National Insurance by 22 July 2026. (Figures are illustrative — a company car’s cash equivalent depends on the vehicle’s list price, CO2 emissions and the appropriate percentage for the year.)
Penalties for getting it wrong
HMRC’s P11D penalties are largely automatic, which is exactly why small employers need to stay on top of the dates:
- Late filing: once the P11D(b) is late, a penalty of £100 per 50 employees applies for each month (or part month) it remains outstanding.
- Incorrect returns: careless or deliberate inaccuracies can attract a penalty of up to £3,000 per form.
- Late payment of Class 1A: interest is charged on late payments, along with escalating percentage penalties that begin at 5% of the unpaid amount after 30 days and increase further at six and twelve months.
None of these are difficult to avoid — they’re almost always the result of a missed deadline or a benefit that wasn’t picked up, both of which good record-keeping (or a good accountant) prevents.
The big change ahead: payrolling benefits in kind
Here’s the development every small employer should have on their radar, because it changes how benefits will be reported altogether.
At present, you can choose to payroll benefits voluntarily — taxing them in real time through your payroll rather than reporting them on a P11D after year end. To do this you have to register with HMRC before the start of the tax year. If you payroll a benefit, it doesn’t go on a P11D, but you still file a P11D(b) to declare the Class 1A National Insurance.
That voluntary system is about to become mandatory. HMRC is moving benefits reporting into real-time payroll, and after an earlier delay, it has confirmed a phased introduction:
- From 6 April 2027, mandatory payrolling is expected to apply first to company cars, car fuel, vans, van fuel and employer-provided medical benefits (including private medical insurance).
- From April 2028, it’s expected to extend to most other benefits in kind.
- Employer-provided living accommodation and employment-related loans will remain reportable on the P11D for the time being, until HMRC announces otherwise.
In short, the P11D isn’t disappearing overnight, but it is being phased out for most benefits. The 2025/26 and 2026/27 tax years are effectively the last full P11D years for many employers. HMRC is still refining the detail, so the sensible approach is to keep an eye on current guidance and start preparing early — reviewing which benefits you provide, checking your payroll software is ready, and understanding how real-time reporting will affect your employees’ take-home pay. Our payroll team can help you get set up well ahead of the deadline.
Common P11D mistakes small employers make
A few recurring issues catch smaller businesses out:
- Forgetting directors count too. Benefits provided to directors are reportable in the same way as those for other employees.
- Missing the “employee copy” deadline. It’s easy to file with HMRC and forget the parallel duty to give employees their information.
- Assuming a perk is exempt when it isn’t — or reporting a trivial benefit that didn’t need to be reported at all.
- Overlooking beneficial loans. Interest-free or low-interest loans to employees over £10,000 are reportable.
- Leaving it to the last minute. Valuing benefits correctly takes time, especially company cars, and a rushed return is where errors creep in.
How MW Accountancy can help
For a small business owner juggling everything else, benefits reporting is exactly the kind of task that’s straightforward when you know the rules and stressful when you don’t. Getting the valuations right, hitting the deadlines, and preparing for the shift to payrolling all take a little know-how — and mistakes carry automatic penalties.
As chartered accountants in Milton Keynes, we handle P11D preparation, benefit valuations and Class 1A calculations for employers of all sizes, and we can get you ready for mandatory payrolling before it lands. Whether you need help with payroll or wider tax compliance and planning, our small, personal team is here to take the burden off your hands. Get in touch to talk it through.
Frequently asked questions
What is a P11D form used for?
A P11D reports the taxable benefits in kind and certain expenses an employer provides to employees and directors that haven’t been taxed through payroll. HMRC uses it to collect the income tax due (usually via the employee’s tax code) and to calculate the employer’s Class 1A National Insurance.
Who needs to file a P11D?
Any employer that provided a taxable benefit in kind to a director or employee during the tax year, and did not tax it through payroll, needs to file. This applies to businesses of any size, including small companies providing benefits only to their directors.
What is the P11D deadline for 2025/26?
The P11D and P11D(b) for the 2025/26 tax year must be filed with HMRC by 6 July 2026, and employees must receive their copy by the same date. Class 1A National Insurance must be paid by 22 July 2026 electronically, or 19 July 2026 by post.
How much is Class 1A National Insurance?
For 2025/26, Class 1A National Insurance is charged at 15% of the total cash equivalent value of the benefits reported. It’s an employer-only cost and is declared on the P11D(b).
What happens if I file my P11D late?
Late filing triggers an automatic penalty of £100 per 50 employees for each month (or part month) the P11D(b) is overdue. Late payment of Class 1A National Insurance adds interest plus percentage penalties starting at 5% after 30 days.
Is the P11D being abolished?
Not immediately, but it’s being phased out. From April 2027, mandatory real-time payrolling is expected to begin for benefits such as company cars, fuel and medical insurance, extending to most other benefits from April 2028. Employer loans and living accommodation will stay on the P11D for now.
Do I still need a P11D if I payroll benefits?
If you payroll a benefit, that benefit doesn’t go on an individual P11D — but you still need to file a P11D(b) to declare and pay the Class 1A National Insurance due on it.
This article provides general information on P11D reporting and is not a substitute for professional advice tailored to your circumstances. Tax rules and rates change, so please confirm the current position with HMRC or a qualified accountant before acting.
