If you gave any of your employees or directors a benefit on top of their salary during the 2025/26 tax year, a company car, private medical cover, a cheap loan or even a gym membership, you almost certainly need to file a P11D by 6 July 2026. Miss it and HMRC penalties start stacking up automatically.
This year the deadline carries extra weight. From April 2027 the P11D system is being replaced by compulsory real time reporting through payroll, so 2026 is one of the last times most employers will go through the traditional process at all. Here is what to do this summer, and how to get ahead of next year's change.
In a nutshell
- A P11D reports the benefits you gave staff. A P11D(b) declares the employer National Insurance you owe on them.
- Two dates matter: 6 July and 22 July 2026. File by the 6th, pay the Class 1A National Insurance by the 22nd.
- Benefits in kind are broader than people think. Cars, medical cover, loans over £10,000, accommodation and more.
- Penalties are automatic and monthly. £100 per 50 employees for every month the P11D(b) is late.
- Payrolling becomes mandatory from April 2027. Most P11Ds disappear after the 2026/27 tax year.
- Plan the transition now. Update payroll software and warn staff their take home pay will change.
1. What a P11D form actually is
A P11D is the form an employer uses to tell HMRC about the taxable benefits and expenses given to a director or employee that were not put through payroll. There is one P11D per person who received benefits.
A P11D(b) is the partner form. It declares the total Class 1A National Insurance the employer owes on those benefits. For 2025/26 the Class 1A rate is 15 per cent of the taxable value of the benefits, in line with the employer National Insurance rate that rose last April.
In short, the P11D tells HMRC what the employee received and feeds into their tax code; the P11D(b) tells HMRC what the employer owes. You file both together.
2. The deadlines you cannot miss
There are two dates, and they are not the same:
- 6 July 2026: submit your P11D and P11D(b) to HMRC, and give each employee a copy of the information reported about them.
- 22 July 2026: pay the Class 1A National Insurance (this is the electronic deadline; if you still pay by post it is 19 July).
Filing is done online, through approved payroll software or HMRC's online service. If you have nothing to report but received a P11D(b) reminder, tell HMRC no return is due, otherwise the system may expect a filing and generate penalties.
3. What counts as a benefit in kind
This is where small employers trip up, because the list is wider than most expect. Common benefits in kind that need reporting include:
- Company cars and vans, and fuel provided for private use
- Private medical and dental insurance
- Interest free or low interest loans where the balance exceeds £10,000 at any point in the year
- Living accommodation provided to an employee
- Gym memberships, professional subscriptions paid on the employee's behalf, and similar perks
- Non business travel, entertainment or assets transferred to an employee
Some things are exempt and do not need reporting. The most useful is the trivial benefits exemption: a benefit costing £50 or less, that is not cash or a cash voucher, and is not a reward for work, is exempt. Think a bottle of wine at Christmas or flowers for a birthday. For directors of close companies there is an annual cap of £300 on trivial benefits.
4. What happens if you file or pay late
HMRC penalties here are automatic, and they accrue monthly rather than as a one off.
For a late P11D(b), the penalty is £100 per 50 employees for each month or part month the return is late. A business with 30 staff pays £100 a month; one with 120 staff pays £300 a month. These build quietly until the return lands.
For late payment of the Class 1A National Insurance, HMRC charges a penalty of 5 per cent of the unpaid amount at 30 days, a further 5 per cent at six months, and another 5 per cent at twelve months, plus interest running the whole time.
Incorrect returns can also attract penalties based on the tax lost, especially where HMRC decides the error was careless. The message is simple: a clean, on time filing is far cheaper than a rushed or late one.
5. Payrolling becomes mandatory in April 2027
This is the big change on the horizon. From 6 April 2027, employers will have to report and tax most benefits in kind through payroll in real time, rather than once a year on a P11D. The tax is collected through the employee's pay packet each month, and the employer's Class 1A National Insurance is reported in real time too.
What that means in practice:
- 2026/27 is the last full year of traditional P11Ds for most benefits. The final P11D under the old system will be the one filed by 6 July 2027.
- Two benefits are carved out: employment related loans and living accommodation are excluded from mandatory payrolling for now. Employers can still choose to payroll them voluntarily, but only if they register, and the registration service for 2027/28 opens in November 2026.
- The P11D(b) does not vanish straight away. Even once benefits are payrolled, employers still file a P11D(b) to declare Class 1A National Insurance, until HMRC moves that into real time too.
If you want to get ahead and payroll voluntarily before it becomes compulsory, you register with HMRC before the start of the tax year you want to begin in. The window to start voluntary payrolling for 2026/27 has already closed, which is exactly why most employers still have a P11D to file this July.
6. What employers should do this summer
A simple plan for the next few weeks:
- Pull together a record of every benefit provided to staff and directors in 2025/26, with values.
- File your P11D and P11D(b) by 6 July 2026 and hand each employee their copy.
- Pay the Class 1A National Insurance by 22 July 2026.
- Then look ahead: check your payroll software is ready for mandatory payrolling, decide whether to start voluntarily for 2027/28, and warn affected staff that from April 2027 the tax on their benefits will come out of their monthly pay, which reduces take home pay even though the benefit itself has not changed.
That last point matters. When benefits move into payroll, employees feel it as a smaller monthly net wage, so telling them in advance avoids a wave of payroll queries next spring.
A quick example: a small limited company
Greenfield Ltd has four employees. During 2025/26 it provided one company car (taxable value £6,000), private medical cover for two staff (£1,200 total) and a £12,000 interest free loan to a director (taxable benefit calculated on the official rate).
The company files four P11Ds (one per benefit recipient), plus a single P11D(b). Its Class 1A National Insurance is 15 per cent of the taxable benefits, roughly £1,080 on the car and medical cover alone, due by 22 July 2026. Filed and paid on time, there is no penalty. Filed a month late, the P11D(b) penalty alone would be £100.
Things to watch out for
- Directors count. Benefits given to company directors are reportable in exactly the same way as for other employees.
- A nil return still needs action. If HMRC expects a P11D(b) and you have nothing to report, tell them, or risk a penalty for a missing return.
- Reimbursed business expenses are usually exempt. Genuine business costs do not generally go on a P11D, but keep the records to prove it.
- Payrolled benefits already skip the P11D, but you still file a P11D(b) for the Class 1A National Insurance.
- Start your payrolling plan now. April 2027 feels far away, but software changes and staff communications take time.
How Ollen Services Can Help
Benefits in kind are one of the easiest things for a small employer to get wrong, and one of the easiest for HMRC to penalise. We prepare and file P11D and P11D(b) returns, calculate your Class 1A National Insurance, and make sure every reportable benefit is captured and every exemption claimed.
Just as importantly, we will help you prepare for mandatory payrolling in April 2027, so the switch is smooth rather than a scramble. That means getting your payroll software ready, deciding what to payroll voluntarily, and briefing your team before their pay packets change.
Call us on 07513 491 259 or email hello@ollenservices.co.uk. The 6 July deadline comes round fast, and a little preparation now saves penalties later.