If you reimburse genuine business expenses, you usually have nothing to report. If you provide benefits such as private medical insurance or a company car, you must report them to HMRC, either on a P11D after the tax year ends or through payroll, and the business pays Class 1A National Insurance on their value.
The rules are changing. From 6 April 2027, most benefits must be reported through payroll, and the annual P11D will largely disappear. Now is a good time to check what you provide and how it is recorded.
Expenses: usually nothing to report
Where an employee pays for something on the business's behalf and you pay them back, the reimbursement is exempt if the employee could have claimed a tax deduction for it themselves. Travel to a temporary workplace, hotels on a business trip and subsistence while travelling are typical examples.
These do not need to go on a P11D. You do need a system that checks claims are genuine, such as receipts and a simple approval step, because HMRC can ask to see it.
Mileage works the same way. Paying an employee up to 45p a mile for the first 10,000 business miles in their own car, and 25p after that, is tax free and not reported. Pay more than that and the excess is taxable earnings, which goes through payroll.
Ordinary commuting is not business travel. Paying for an employee's daily journey to their normal workplace is taxable.
Benefits: what must be reported
A benefit is something provided to an employee that is not cash pay. Common examples are:
- company cars and fuel for private use
- vans available for private use beyond ordinary commuting
- private medical insurance
- loans to employees over £10,000 at below the official rate of interest
- accommodation
- gym memberships and other personal costs paid by the business
Some benefits are exempt and never need reporting. These include one mobile phone per employee on a contract held by the employer, trivial benefits of £50 or less, a qualifying staff party, cycle to work schemes, workplace parking, eye tests for screen users, annual health screening and work-related training.
The deadlines
For benefits provided in 2026/27, which runs from 6 April 2026 to 5 April 2027:
- 6 July 2027: submit a P11D for each employee with reportable benefits, and the P11D(b) summarising the Class 1A National Insurance due. Give each employee a copy of their P11D by the same date.
- 22 July 2027: pay the Class 1A National Insurance electronically. If paying by cheque, it must reach HMRC by 19 July.
- 22 October: payment date for any PAYE Settlement Agreement, where the business has agreed to pay the tax on minor or irregular benefits on employees' behalf.
A worked example
A company provides private medical insurance to a manager. The premium is £1,200 a year.
The company reports £1,200 on the manager's P11D. It pays Class 1A National Insurance at 15 percent, which is £180. The manager is a higher rate taxpayer, so they pay 40 percent tax on £1,200, which is £480. HMRC usually collects this by adjusting their tax code.
The premium is still a deductible cost for the company, and the Class 1A National Insurance is deductible too.
Payrolling benefits from April 2027
From 6 April 2027, employers must report and tax most benefits through payroll in real time. The cash equivalent of each benefit is added to the employee's taxable pay each pay period, so the tax is collected as the year goes on instead of through a tax code adjustment later.
Employment-related loans and living accommodation can still be dealt with outside payroll for now. Class 1A National Insurance remains payable by the employer.
In practice, this means you need accurate benefit values before the start of the year, and changes, such as a new company car, need to reach whoever runs your payroll promptly. Many payroll systems already support payrolling benefits, and some businesses choose to move early so the first year is not a scramble.
What to do
- List every benefit you provide, and check which are exempt and which are reportable.
- Make sure your expense claims process requires receipts and approval.
- Check mileage rates paid are no higher than 45p and 25p a mile.
- Diary 6 July for P11D forms and 22 July for Class 1A payment.
- Talk to your payroll provider now about payrolling benefits from April 2027.
If you would like us to review your benefits and get payroll ready for 2027, book a free call.
