Policy paper

Changes to employer provided benefits policy and administration

Published 3 March 2026

Who is likely to be affected

These measures will affect employers who either:

• have ceased to trade during the tax year and are required to file P11D and P11D(b) returns
• want to voluntarily register to report benefits in kind they provide to their employees, in real time using payroll software, from the 2027 to 2028 tax year

General description of the measure

Legislating the exemption from electronic filing of expenses and benefits forms for employers who cease to trade during the tax year (or insolvency practitioners who act on their behalf) with effect from 6 April 2026 (hereafter ‘Measure 1’)

This measure allows employers who have ceased to trade during the tax year (or insolvency practitioners who act on their behalf), to submit paper P11D and P11D(b) returns to HMRC for the year of cessation mid-year. This enables the employer to finalise their position following their cessation of trade, before the tax year ends.

Legislating to prevent employers from legally being able to voluntarily register to report the benefits in kind they provide to their employees, to HMRC, in real time throughout the tax year from 6 April 2026 (hereafter ‘Measure 2’)

The measure will remove the option for employers to voluntarily register to report benefits in kind in real time from 6 April 2026 onwards for the 2027 to 2028 tax year and following years. This is a necessary step otherwise employers will still be legally able to voluntarily register which would undermine the mandatory requirement to report benefits in kind in real time which is being introduced from April 2027.

Policy objective

Measure 1

This measure is intended to facilitate the filing of P11D and P11D(b) returns by employers who cease to trade during the tax year (or insolvency practitioners acting on their behalf). Forms P11D and P11D(b) are used by employers to report their employees’ taxable benefits to HMRC.

The measure puts into statute a filing concession for employers who cease to trade during the tax year (or insolvency practitioners acting on their behalf) and are required to submit electronic P11D and P11D(b) returns to report their employee’s taxable benefits to HMRC. By concession, affected employers can file paper returns during the year, without it they would have to wait until the tax year ends, and the online filing window opens, to be able to file these forms electronically.

The measure allows this specific group of customers to file paper forms P11D and P11D(b) with HMRC if they choose to submit these forms before the end of the tax year.

Measure 2

This measure intends to remove the legal ability for employers to voluntarily register to report benefits in kind, that they provide to their employees, in real time from 6 April 2026 onwards. If the voluntary facility is not removed, this will undermine HMRC’s efforts to mandate the real time reporting of benefits in kind from 6 April 2027. It will also cause confusion to employers if the option to voluntarily register to report benefits in kind in real time remains alongside the mandatory requirement to report them in real time from April 2027.

This measure supports the work that is being done to mandate the real time reporting of benefits in kind which, in turn, aligns with the government’s aim to simplify tax reporting, reduce errors, and close the tax gap.

Background to the measure

Measure 1

Since 2023, it has been mandatory for all employers who are not exempt under current legislation to submit forms P11D and P11D(b) electronically. The online filing window does not open until after the end of the tax year, so it is not possible for employers to electronically file in-year returns when they cease to trade during the tax year.

Currently we allow employers who cease to trade during the tax year (or insolvency practitioners acting on their behalf), to file paper returns before the tax year ends to finalise their position as a filing concession.

We intend to amend the PAYE and the National Insurance contributions legislation with effect from 6 April 2026 so that employers who cease to trade and choose to send forms P11D and P11D(b) mid-year are exempt from mandatory electronic filing.

Measure 2

In January 2024, the previous government announced that employers will be mandated to report benefits in kind in real time from April 2026. In April 2025, a technical note was published where it was announced that real time reporting will take effect from April 2027, rather than 2026, to provide more time for business to adopt this change.

Currently we allow employers to register to voluntarily report benefits in kind, in real time, to HMRC. Employers who choose to do so are required to register with HMRC before the start of the tax year. From April 2027, voluntary registration will not be required as employers will be mandated to report and pay both Income Tax and Class 1A National Insurance contributions on benefits in kind in real time.

We intend to amend the PAYE regulations with effect from April 2026 so that employers will not be able to register to voluntarily report benefits in kind in real time from 6 April 2026 onwards for the 2027 to 2028 tax year and following years in preparation for mandatory reporting of benefits kind in real time.

Detailed proposal

Operative date

Both measures will have effect from 6 April 2026.

Current law

Measure 1

This measure will amend current laws governing exceptions to mandatory electronic filing.

They are found in Regulation 207 of the Income Tax (Pay As You Earn) Regulations 2003 (‘the PAYE regulations’) and Regulation 80 of the Social Security (Contributions) Regulations 2001 (‘the National Insurance contributions regulations’), which applies Paragraph 21D of Schedule 4 of the Social Security (Contributions) Regulations 2001.

Measure 2

This measure will amend current laws to prevent employers from legally being able to voluntarily register to report benefits in kind in real time from 6 April 2026 onwards.

The current law is found in Chapter 3A of Part 3 of the Income Tax (Pay As You Earn) Regulations 2003 (SI 2003/2682).

Proposed revisions

Measure 1

We will amend the PAYE regulations and the National Insurance contributions regulations so that employers who cease to trade during the tax year (or insolvency practitioners acting on their behalf) and want to send forms P11D and P11D(b) mid-year, are permitted to send in paper forms rather than being required to file online.

Measure 2

We will amend the PAYE regulations so that employers will not be able to voluntarily register to report the benefits in kind in real time via payroll software from 6 April 2026 onwards.

Summary of impacts

The following summary of impacts apply to Measures 1 and 2.

Exchequer impact (£ million)

2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031
Nil	Nil	Nil	Nil	Nil	Nil

These measures are not expected to have an Exchequer impact.

Economic impact

These measures are not expected to have any significant macroeconomic impacts.

Impact on individuals, households and families

There is not expected to be any impact on individuals as these measures only affect businesses. These measures are not expected to impact on family formation, stability, or breakdown.

Equalities impacts

These measures only affect businesses; therefore, it is not anticipated that there will be disproportionate impacts on those in groups sharing protected characteristics.

Impacts on business including civil society organisations

The impact of these measures is likely to be negligible.

Measure 1 is expected to have no overall impact on the low number of businesses per year who currently submit in-year cessation forms P11D and P11D(b) to HMRC. Currently we exempt businesses who cease trading mid-year from mandatory electronic filing by concession. Amendments to PAYE and National Insurance contributions legislation will provide a permanent solution to ensure that those who cease trading mid-year continue to be exempt from mandatory electronic filing.

Measure 2 is expected to have no overall impact as only 16,000 businesses have registered to voluntarily report benefits in kind in real time since its introduction in 2016.

For both measures one-off costs could include familiarisation with this change. There are not expected to be any further one-off or continuing costs.

These measures are not expected overall to have an impact on businesses’ experience of dealing with HMRC as the changes do not change any processes or tax admin obligations

These measures are not expected to impact civil society organisations.

Operational impact (£ million) (HMRC or other)

These measures are not expected to have an operational impact for HMRC.

Other impacts

Other impacts have been considered, and none have been identified.

Monitoring and evaluation

Measure 1 — We will continue to monitor the volumes of paper forms received.

Measure 2 — We will continue to monitor how the removal of the voluntary registration service affects customers.

Further advice

If you have any questions about these changes, contact HMRC using these details.

Contact Sarah Reardon by:

• telephone: 03000 524 966
• email: sarah.reardon@hmrc.gov.uk

Contact Demi Abeynayake by:

• telephone: 03000 585 899
• email demi.abeynayake@hmrc.gov.uk

Declaration

Dan Tomlinson MP, Exchequer Secretary to the Treasury has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.