Key takeaways
- Most taxable benefits, such as company cars and private medical insurance, are reported on a P11D for each employee by 6 July after the tax year.
- Employers pay Class 1A National Insurance at 15% on benefits, reported on the P11D(b) and paid by 22 July.
- Benefits can be payrolled instead, taxing them through the payslip; from 6 April 2027 payrolling becomes compulsory for cars, fuel, vans and medical cover.
- Many benefits are exempt, including employer pension contributions, trivial benefits up to £50 and a staff party up to £150 a head.
- Employees pay tax on benefits through their tax code, which HMRC adjusts based on P11D information.
A benefit in kind is anything of value an employer provides to an employee or director other than cash pay: a company car, health insurance, a loan, accommodation, gym membership. Most are taxable on the employee and carry employer National Insurance. This guide covers how they are valued, reported and paid for, and the change to real-time reporting in April 2027.
Common taxable benefits and how they are valued
| Benefit | Taxable value (cash equivalent) |
|---|---|
| Company car | List price × appropriate percentage based on CO2 emissions; see company car tax |
| Fuel for private use in a company car | £29,200 × the car’s appropriate percentage (2026/27) |
| Company van with private use | £4,170 (2026/27); zero-emission vans £0 |
| Fuel for a van | £798 (2026/27) |
| Private medical insurance | Cost to the employer |
| Beneficial loans over £10,000 | Interest at the official rate less interest paid |
| Living accommodation | Annual value, plus extra if the property cost over £75,000 |
| Gym membership, non-business subscriptions | Cost to the employer |
| Assets given to employees | Market value when given |
| Assets lent to employees | 20% of market value each year |
Employees pay Income Tax on the cash equivalent at their marginal rate, usually collected through a reduction in their tax code. See tax codes explained.
Exempt benefits
These do not need reporting and carry no tax or NI:
- employer contributions to a registered pension scheme
- one mobile phone per employee, with the contract in the employer’s name
- trivial benefits costing £50 or less each, that are not cash, not a reward for work and not contractual (directors of close companies are limited to £300 a year)
- an annual staff party or event costing up to £150 a head in total for the year
- work-related training, and eye tests and glasses needed for screen work
- from 6 April 2026, reimbursed costs of eye tests, flu vaccinations and home working equipment
- workplace parking, canteen meals available to all staff, and cycle to work schemes within the rules
- payments for business mileage within the approved amounts (55p a mile for the first 10,000 miles in 2026/27)
The P11D and P11D(b)
For each tax year, employers report benefits that are not payrolled:
| Form | What it covers | Deadline |
|---|---|---|
| P11D | Benefits and expenses for each employee or director | 6 July after the tax year |
| P11D(b) | Total Class 1A NI due for all employees | 6 July after the tax year |
| Class 1A payment | 15% of the total taxable benefits | 22 July (electronic) or 19 July (cheque) |
| Copy of P11D to the employee | Information for their records and tax return | 6 July |
For 2025/26 benefits, the deadlines were 6 July 2026 and payment by 22 July 2026. For 2026/27 they are 6 July 2027 and 22 July 2027.
Penalties apply for late or inaccurate P11Ds, and late Class 1A payments attract interest and penalties. If an employer has no benefits to report but HMRC has sent a P11D(b) notice, it must still submit a nil return or tell HMRC.
Payrolling benefits
Instead of a P11D, employers can payroll benefits: the taxable value is added to the employee’s pay in equal amounts through the year and taxed in real time. Payrolling:
- removes the benefit from the employee’s tax code, so the tax is visible on the payslip
- avoids tax code estimates and year-end underpayments
- means no P11D is needed for those benefits, although a P11D(b) is still used for Class 1A
Mandatory payrolling from April 2027
From 6 April 2027, employers must payroll:
- company cars and car fuel
- vans and van fuel
- private medical benefits
Employment-related loans and living accommodation do not have to be payrolled, but can be voluntarily. Employers who want to voluntarily payroll other benefits must register, with the service opening in November 2026 and a deadline of 5 April 2027. HMRC will remove benefits from employees’ tax codes ready for the change.
Employees who currently pay tax on benefits through their tax code will see the tax on their payslip instead from April 2027. Some will pay tax on the current year’s benefit while still repaying underpayments from earlier years, so early communication matters.
Expenses
Business expenses paid or reimbursed by an employer, such as travel and subsistence on business trips, are usually exempt if they would be deductible for the employee, so they do not need reporting. Expenses that are not business expenses, such as paying an employee’s home phone bill in their name, are taxable as earnings.
PAYE Settlement Agreements
If an employer wants to pay the tax on minor, irregular or impracticable benefits itself, such as a staff awards dinner or gifts above the trivial benefit limit, it can use a PAYE Settlement Agreement. Those items then do not go on a P11D.
Frequently asked questions
When is the P11D deadline?
6 July after the end of the tax year: 6 July 2027 for benefits provided in 2026/27. Class 1A NI must be paid by 22 July (19 July by cheque).
What rate of Class 1A National Insurance applies in 2026/27?
15% of the taxable value of benefits in kind.
Is payrolling benefits compulsory?
From 6 April 2027 it will be compulsory for company cars, car fuel, vans, van fuel and private medical benefits. Until then it is voluntary, and other benefits can be payrolled voluntarily.
Do I need to report a staff Christmas party?
Not if the total cost of annual events for the year is £150 or less a head and the event is open to all staff, or all staff at a location.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance in October 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.