Penalties and interest
Information about penalties and interest.
To support the smooth introduction of this change, customers who have made an error related to mandatory payrolling in their Real Time Information (RTI) returns for 2027 to 2028 will not be charged penalties for inaccuracies unless there is evidence of deliberate non-compliance. Existing late filing and late payment penalties will still apply.
There will be no change to the penalties that apply for P11D and P11D(b) returns where an employer is required to complete those returns (for example, where employment related loans or accommodation are not payrolled).
For later tax years from 2028 to 2029 onwards, penalties and interest will apply for mandatorily payrolled benefits in kind (BiKs) and expenses. HMRC will provide further details on penalties and interest in the first half of 2026 when we publish draft legislation and guidance on this subject.
Penalties and interest may be applied in the following scenarios:
- late Full Payment System (FPS) filing
- Non-Submission of an FPS
- overdue FPS submission
- incorrect submission of a P11D or P11D(b)
- incorrect submission of alternative reporting methods for BiKs
- late payment of taxes
- incorrect use of the end of year process (for example, reporting all BiKs at the end of the year instead of during the year)
- deliberate and concealed errors
Ensure that from April 2027, BiKs are reported correctly as employees may end up with underpayments of tax on BiKs that should have been reported earlier in the tax year.
No penalties will be charged if a reasonable estimate of the taxable value is used due to insufficient information.
More information about penalties and interest in relation to mandatory payrolling will be provided in future updates.