From April 2026, small and medium-sized businesses will be required to report and pay taxes on employee benefits like company cars and accommodation directly through their payroll software.
This change eliminates the need for separate paperwork and simplifies the process.
Ultimately, the goal is to make managing employee benefits more efficient while reducing administrative hassles for SME owners.
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Benefits-in-Kind (BIK) refers to the non-cash benefits provided to employees, such as company cars, accommodation, or beneficial loans.
Starting in 2026, you'll need to report and pay Income Tax and Class 1A National Insurance Contributions (NICs) on these benefits via your payroll software.
The good news is that this change is designed to simplify your administrative burden.
You can say goodbye to the separate P11D and P11D(b) forms.
Everything will be integrated into your payroll system, reducing paperwork and making your financial management more efficient.
Implications for SMEs
We’ve been getting questions from clients asking if there are downsides to this change.
While there shouldn’t be any direct financial implications, your payroll software will need looking into, which could turn out to be a costly expense.
If a specialist doesn’t already handle your payroll, you’ll need to ensure that your payroll software is up to date and compliant with the new requirements.
This might mean investing in new software or updating your existing one.
You’ll have to be prepared for potential costs associated with software upgrades and training staff.
It might be cheaper and easier to just outsource this responsibility to a qualified and experienced accounting professional.
By outsourcing, you are not only improving your business’s payroll efficiency, but you are also opening yourself up to a wealth of advice and information on your specific business needs.
Either way, you’ll need to seriously think about your payroll management in the near future as 2026 is only just around the corner – not a very long time to train your staff and get up to speed with the latest requirements!
Please speak to our team about outsourcing your payroll today.