Payrolling Benefits Decision Tree
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Payrolling benefits vs P11D decision tree
A decision tree to help UK employers decide whether to payroll benefits in kind or continue using P11D — particularly relevant as payrolling becomes mandatory for most benefits from April 2026.
Who it’s for: Payroll managers and finance leads at UK employers
How to use
Follow these steps
Identify the benefits provided
List every taxable benefit: company cars, fuel, private medical insurance, gym, mobile phone (where private use), loans over £10,000, etc.
Check the mandatory list
From April 2026, most benefits must be payrolled in real time. Loans and accommodation initially remain outside. Living accommodation and beneficial loans will continue on P11D for now.
Register with HMRC before the tax year starts
To payroll a benefit, register with HMRC before 5 April for the following tax year — registration is voluntary now, mandatory from April 2026 for most.
Decide what to tell employees
Payrolled benefits show on payslips and P60, not on a P11D. Employees see the BiK value in their gross pay. Explain to avoid confusion when they file Self Assessment.
Update payroll software
Most payroll software (Xero, Sage, BrightPay, IRIS) handles payrolling natively. Test on a parallel run before going live to verify the BiK values and tax calculations.
Year-end reconciliation
Even with payrolling, you may still owe Class 1A NIC at year-end. The P11D(b) form is still required to declare and pay Class 1A NIC by 22 July following the tax year end.
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