Report expenses and benefits (P11D)

What employers must report

If you provide expenses or benefits to employees beyond their salary, you may need to report them to HMRC and pay Class 1A National Insurance. This applies to benefits such as company cars, private medical insurance, interest-free loans, and assets given or loaned to employees.

You report these benefits either through:

P11D forms - submitted annually by 6 July
Payrolling - adding the benefit value to taxable pay through PAYE (optional now, mandatory from April 2027)

P11D and Class 1A NIC key deadlines

Annual deadlines for reporting benefits in kind and paying employer NICs.

P11D submission deadline: 6 July following end of tax year
P11D(b) submission deadline: 6 July following end of tax year
Copy P11D to employees by: 6 July following end of tax year
Pay Class 1A NICs (electronic): 22 July following end of tax year
Pay Class 1A NICs (cheque): 19 July following end of tax year

For the 2024/25 tax year, all deadlines fall in July 2025. Paper P11D forms are no longer accepted - you must submit online using PAYE Online or commercial payroll software.

Class 1A National Insurance on benefits

As an employer, you must pay Class 1A NICs on most taxable benefits. This is in addition to any income tax the employee pays on the benefit through their tax code.

Class 1A NIC rate on benefits in kind (2025/26)

Employer National Insurance rate on taxable benefits in kind and termination payments.

Class 1A NIC rate: 15%
Effective from: 6 April 2025
Previous rate (2024/25): 13.8%

Class 1A NICs are paid on the cash equivalent value of benefits reported on P11D. The rate increased from 13.8% to 15% from April 2025 as part of the Employer NIC increase. Class 1A NICs are paid in a single annual payment by 22 July.

Company cars and fuel

Company cars are one of the most common reported benefits. The taxable value depends on the car's list price and its CO2 emissions. Electric vehicles have significantly lower BIK rates than petrol or diesel cars.

Company car benefit in kind rates (2025/26)

BIK percentages for company cars based on CO2 emissions and electric range.

Zero emissions (0g/km): 3%
1-50g/km, 130+ miles electric range: 3%
1-50g/km, 70-129 miles range: 6%
1-50g/km, 40-69 miles range: 9%
1-50g/km, 30-39 miles range: 13%
1-50g/km, under 30 miles range: 15%
51-54g/km: 16%
Maximum rate (160g/km+): 37%
Diesel supplement (non-RDE2): +4% (up to 37% max)

The appropriate percentage is applied to the car's list price to calculate the taxable benefit. Zero and low-emission vehicles benefit from significantly lower BIK rates. The diesel supplement applies to diesels not meeting Real Driving Emissions 2 (RDE2) standards.

Company car and car fuel benefit calculator

Car fuel benefit charge (2025/26)

Taxable benefit when employer provides fuel for private use of company car.

Fuel benefit multiplier: £28,200
Previous multiplier (2024/25): £27,800
Calculation: Multiplier × car BIK percentage

If you provide fuel for private use of a company car, the fuel benefit is calculated by multiplying £28,200 by the car's BIK percentage. Example - a car with 20% BIK rate creates a fuel benefit of £5,640. No fuel benefit applies if the employee pays for all private fuel themselves.

Company vans

If you provide a company van for private use, a flat-rate benefit charge applies. Zero-emission electric vans are exempt.

Van benefit and fuel charges (2025/26)

Flat-rate taxable benefit charges for private use of company vans.

Van benefit charge: £4,020 per year
Van fuel benefit charge: £769 per year
Zero-emission van benefit: £0 (exempt)
Zero-emission van fuel benefit: £0 (exempt)

Van benefits are flat-rate charges regardless of the van's value. The charges apply when a van is made available for private use. Home-to-work travel in a company van does not count as private use if the van is required at the workplace. Zero-emission electric vans are completely exempt.

Private medical insurance

If you pay for private medical insurance for employees, the full premium cost is a taxable benefit. The employee pays income tax on the value, and you pay Class 1A NICs.

Private medical insurance benefit reporting

How to report and value private medical insurance for employees.

Taxable value: Full premium cost paid by employer
P11D section: Section I
Class 1A NIC: Employer pays 15% on premium value
Employee NIC: None

Report the full cost of the premium in Section I of the P11D. The employee pays income tax on the benefit through PAYE code adjustment. The employer pays Class 1A NIC on the benefit value. This applies to private medical insurance for the employee and their family members.

Loans to employees

Interest-free or low-interest loans to employees may create a taxable benefit if the loan exceeds a threshold.

Beneficial loan threshold and official rate (2025/26)

Rules for interest-free or low-interest loans to employees.

Exemption threshold: £10,000
Official rate of interest: 3.75%
Previous rate (2024/25): 2.25%

No taxable benefit arises if the total of all loans to an employee is less than £10,000 at all times during the tax year. If loans exceed £10,000 at any point, the benefit is calculated on the difference between the official rate (3.75%) and any interest actually charged. The official rate increased significantly in April 2025.

Living accommodation

If you provide housing for an employee, the accommodation value is a taxable benefit unless it qualifies for an exemption (such as job-related accommodation).

Living accommodation benefit rules

How to calculate and report accommodation provided to employees.

Basic charge: Annual value (higher of rateable value or rent paid)
Additional charge threshold: £75,000
Additional charge calculation: (Cost - £75,000) × official rate
Can be payrolled?: No - must use P11D

Living accommodation cannot be payrolled and must always be reported on P11D. If the property cost more than £75,000, an additional charge applies on the excess using the official rate of interest. Job-related accommodation may be exempt if provided for better performance of duties, for security reasons, or as customary for the employment.

Benefits that are exempt

Some benefits do not need to be reported and are free from tax and NICs.

Benefits exempt from P11D reporting

Benefits in kind that do not need to be reported on P11D.

Workplace parking: Exempt - no reporting required
Staff canteen meals: Exempt if available to all staff
One mobile phone: Exempt (one per employee)
Cycle to Work scheme: Exempt during loan period (50%+ work use)
Annual staff parties/events: £150 per head per year limit
Relocation expenses: First £8,000 exempt

Exempt benefits do not appear on P11D and attract no tax or NIC. If annual party costs exceed £150 per head, the full amount becomes taxable. Relocation costs over £8,000 must be reported. Additional mobile phones beyond the first are taxable.

Trivial benefits exemption rules

Tax exemption for small benefits provided to employees.

Maximum cost per benefit: £50
Annual cap for close company directors: £300 per tax year

A benefit is exempt if it costs £50 or less, is not cash or a cash voucher, is not a reward for work performance, and is not a contractual entitlement. If the cost exceeds £50, the entire amount is taxable - not just the excess. For directors of close companies (and their family members), there is an additional £300 annual cap. Salary sacrifice benefits cannot qualify as trivial.

Mileage allowances

If employees use their own vehicle for business travel, you can reimburse them tax-free up to approved rates. Amounts above these rates must be reported on P11D.

Approved mileage allowance payment (AMAP) rates

Tax-free mileage rates for employees using own vehicle for business.

Cars - first 10,000 miles: 45p per mile
Cars - over 10,000 miles: 25p per mile
Motorcycles: 24p per mile
Bicycles: 20p per mile
Passenger payment: 5p per mile per passenger

If you reimburse employees at or below these rates, there is nothing to report on P11D. If you pay above these rates, the excess must be reported on P11D as taxable earnings. If you pay below these rates, employees can claim Mileage Allowance Relief.

How to report: P11D submission process

Follow these steps to complete your annual P11D and P11D(b) submissions.

P11D annual submission process

Steps to complete and submit P11D and P11D(b) forms to HMRC.

1. Compile benefits data for each employee – Gather records of all taxable benefits provided during the tax year, including company cars, fuel, loans, medical insurance, and other non-exempt benefits.
2. Calculate cash equivalent values – Use HMRC working sheets where applicable (WS1 for accommodation, WS2 for cars). Apply correct rates and allowances for the tax year.
3. Complete P11D forms online – Use PAYE Online service (under 500 employees) or commercial payroll software (over 500 employees). Paper forms are no longer accepted.
4. Calculate total Class 1A NICs – Multiply total benefit values by 15% (2025/26 rate). This is the employer liability on all benefits in kind.
5. Complete P11D(b) form – The P11D(b) declares the total Class 1A NICs payable. Required even if you have payrolled some benefits.
6. Submit by 6 July – P11D and P11D(b) must be submitted by 6 July following the end of the tax year. For 2024/25, deadline is 6 July 2025.
7. Provide copies to employees – Give each employee a copy of their P11D by 6 July. This allows them to check the benefits reported.
8. Pay Class 1A NICs – Pay by 22 July (electronic) or 19 July (cheque). Late payment penalties apply from day one.

PAYE Online for employers

Penalties for late or incorrect reporting

HMRC imposes penalties for late submission, late payment, or inaccurate returns.

P11D late filing and inaccuracy penalties

Penalties for failing to submit P11D forms on time or correctly.

Late P11D initial penalty: Up to £300 per form (Tribunal approval)
Daily penalty (continued failure): £60 per day
Late P11D(b) penalty: £100 per 50 employees per month late
Incorrect return penalty: Up to £3,000 per form
Class 1A 30+ days late: 5% of unpaid NICs
Class 1A 6+ months late: Additional 10% of unpaid NICs
Class 1A 12+ months late: Additional 15% of unpaid NICs

Penalties accumulate significantly for prolonged failure to file or pay. The £300 per form initial penalty requires First-tier Tribunal approval but is routinely sought by HMRC for significant delays. Submitting on time but incorrectly can attract penalties up to £3,000 per form for deliberate inaccuracies.

Payrolling benefits

Instead of reporting benefits on P11D, you can choose to 'payroll' them - adding the cash equivalent to the employee's taxable pay each month. This means the tax is collected through PAYE in real time.

Register to payroll benefits in kind

Process to register for payrolling taxable benefits through PAYE.

1. Decide which benefits to payroll – Most benefits can be payrolled, except living accommodation and beneficial loans which must always use P11D.
2. Register before 6 April – You must register before the start of the tax year. You cannot start payrolling mid-year. Use HMRC's online payrolling registration service.
3. Update payroll system – Configure your payroll to add benefit values to employees' taxable pay each pay period. The benefit is then subject to normal PAYE.
4. Calculate monthly amounts – Divide annual benefit value by 12 (or number of pay periods). Add this to taxable pay alongside salary.
5. Inform employees by 1 June – By 1 June following the tax year end, provide employees with details of which benefits were payrolled and their total values.
6. Still submit P11D(b) – You must still submit P11D(b) declaring Class 1A NICs - payrolling only removes the need for individual P11D forms.

Payrolling benefits is optional for 2025/26 and 2026/27 but becomes mandatory from April 2027. The main advantage is that employees pay the right tax throughout the year rather than through tax code adjustments.

Mandatory payrolling of benefits from April 2027

Upcoming requirement for all employers to payroll most benefits.

Mandatory date: 6 April 2027
Original planned date: April 2026 (delayed)
Benefits still excluded: Living accommodation, beneficial loans

From April 2027, employers must payroll most taxable benefits through PAYE instead of reporting on P11D. This was delayed from the original April 2026 date to give employers more preparation time. Benefits that cannot be payrolled (accommodation, loans) will still require P11D reporting. P11D(b) for Class 1A NICs will still be required.

Share schemes: Employment Related Securities

If you operate any share scheme or award shares to employees, you must file an annual Employment Related Securities (ERS) return by 6 July. This applies to both tax-advantaged schemes and non-tax-advantaged arrangements.

Tax-advantaged share scheme types

Overview of the four approved share scheme types with tax advantages.

EMI (Enterprise Management Incentives): Share options for SMEs - no income tax on grant or exercise
CSOP (Company Share Option Plan): Options up to £60,000 - no income tax on exercise
SIP (Share Incentive Plan): Free, partnership and matching shares - tax-free after 5 years
SAYE (Save As You Earn): Savings-linked options - tax-free on exercise after 3/5 years

Each scheme must be separately registered with HMRC and requires its own annual return. Tax-advantaged schemes provide significant benefits for employees but have strict eligibility and reporting requirements. Failure to comply with scheme rules can result in loss of tax advantages.

Set up and register a share scheme

Employment Related Securities annual return

Requirements for reporting share scheme transactions to HMRC.

Annual return deadline: 6 July following tax year
Nil return required?: Yes - even if no reportable events
Registration deadline: 6 July following year scheme established
Late filing penalty (initial): £100 automatic
Late filing penalty (3 months): £300 additional
Late filing penalty (6 months): £10 per day (up to 300 days, maximum £3,000)
Inaccuracy penalty (max): £5,000 per return

Any employer operating a share scheme must file an ERS annual return. This applies to tax-advantaged schemes (EMI, CSOP, SIP, SAYE) and non-tax-advantaged arrangements. Failure to register a tax-advantaged scheme by the deadline loses the tax benefits. A nil return is required even if there were no share transactions during the year.

EMI option notification deadlines

Deadlines for notifying HMRC of EMI option grants.

Options granted before 6 April 2024: 92 days from date of grant
Options granted from 6 April 2024: 6 July following the tax year of grant

The notification deadline for EMI options changed in April 2024. For options granted from that date, notification is now aligned with the ERS annual return deadline of 6 July. Failure to notify within the deadline means the options do not qualify for EMI tax treatment and become taxable as ordinary employment income.

Primary legislation

Secondary legislation

Official guidance

Regulator guidance to help you understand your obligations.

Pay Apprenticeship Levy (GOV.UK) (opens in new tab) Detailed Guidance GOV.UK
Scottish income tax rates (gov.scot) (opens in new tab) Detailed Guidance www.gov.scot
Stop being self-employed (opens in new tab) Detailed Guidance GOV.UK

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Report expenses and benefits (P11D)

What employers must report

Class 1A National Insurance on benefits

Company cars and fuel

Company vans

Private medical insurance

Loans to employees

Living accommodation

Benefits that are exempt

Mileage allowances

How to report: P11D submission process

Penalties for late or incorrect reporting

Payrolling benefits

Share schemes: Employment Related Securities

Compliance Assistant

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What employers must report

Class 1A National Insurance on benefits

Company cars and fuel

Company vans

Private medical insurance

Loans to employees

Living accommodation

Benefits that are exempt

Mileage allowances

How to report: P11D submission process

Penalties for late or incorrect reporting

Payrolling benefits

Share schemes: Employment Related Securities

Related guides in Tax & Finance

Business Context Testing

Content Graph