Payrolling of employer provided benefits: is your business ready?

Are you a UK business owner grappling with mountains of paperwork? Brace yourself, because your benefits administration is about to get a digital makeover. In April 2026, HMRC will require the payrolling of employer-provided benefits (or benefits-in-kind), streamlining tax reporting and waving goodbye to countless P11D forms.

Here we take a look at what this will mean for business owners and finance teams, and the preparations needed to be compliant.

What does payrolling of employer provided benefits mean?

In short, it’s time to ditch the manual and embrace automation.

Instead of filing separate returns for employee benefits like health insurance and company cars, you’ll be reporting and paying income tax and Class 1A National Insurance contributions directly through your payroll software. This aims to simplify processes, reduce errors, and free up valuable time for you to focus on what matters most – growing your business.

What changes will payrolling of employer provided benefits require?

While a switch to payrolling of employer provided benefits may seem daunting and the deadline relatively far off, it is important to start making preparations now.

Specifically:

• System upgrades: businesses will need to review their existing payroll software and determine which upgrades/integrations are required to process benefits in kind digitally. In some cases, upgrades to existing payroll software may not be available requiring a costly and complex switch to a new system;
• Data migration: employers may need to transfer existing employee benefits data from current systems to their payroll software. This will be particularly tricky for businesses that are still processing manually; and  
• Training requirements: payrolling of employer provided benefits will most likely require additional training for in-house payroll teams. This may incur additional costs and training resources from payroll software providers is likely to come at a premium as so many businesses will be requiring support.

Is your business ready for payrolling of employer provided benefits?

Undoubtedly, the knowledge and support of Payroll processing experts will be essential for businesses as they switch to payrolling of employer provided benefits. As well as being able to troubleshoot many of the issues mentioned above, Consilium Chartered Accountants also provides comprehensive Payroll outsourcing for businesses of all sizes.

Businesses mustn’t be tempted to leave payrolling of employer provided benefits as a problem for ‘next year’. Addressing the new rules now could help to minimise issues and delays when they come into force in April 2026.

We are happy to speak to business owners and payroll teams about the forthcoming changes. For more information please contact our Head of Payroll John McSheffrey or learn more about our Payroll outsourcing and Cloud Accounting services.   

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