The government has introduced new regulations affecting how employers report benefits in kind, with significant changes set to take effect from 6 April 2026. These measures primarily concern employers who cease trading during a tax year and those who choose to voluntarily register to report benefits provided to employees in real time.
The reforms aim to streamline reporting processes, reduce errors, and lay the groundwork for mandatory real-time reporting of benefits in kind from April 2027. The new rules reflect a broader goal to simplify tax administration and close the tax gap by ensuring more accurate and timely reporting.
Overview of Upcoming Changes
From 6 April 2026, two key changes will be implemented regarding the administration of benefits in kind provided by employers. The first measure allows employers who have ceased trading during a tax year, or insolvency practitioners acting on their behalf, to file paper P11D and P11D(b) returns with HMRC before the tax year ends.
The second measure prevents employers from voluntarily registering to report benefits in kind in real time from this date, in preparation for making such reporting mandatory in subsequent years.
Who Will Be Affected
These changes target employers required to submit expenses and benefits forms upon ceasing trade mid-year and those who currently use voluntary real-time reporting for employee benefits.
The reforms also extend to insolvency practitioners acting on behalf of affected employers. Individual taxpayers, households, and families are not expected to experience any direct impact, as the changes solely affect business processes.
Exemption for Employers Ceasing Trade
Since 2023, employers have been required to file P11D and P11D(b) returns electronically unless exempted by law. However, when an employer ceases trading during the tax year, the online filing window is not open, preventing timely electronic submission.
Under a concession, these employers have been permitted to submit paper returns mid-year. The updated rules, effective from April 2026, will permanently enshrine this exemption into law.
Employers or insolvency practitioners can thus meet their obligations and finalise their tax position upon cessation before the year end.
Ending Voluntary Benefits Reporting Registration
At present, employers may choose to register with HMRC in advance to report benefits in kind in real time through payroll. However, the government intends to make real-time reporting mandatory from April 2027.
To avoid confusion and to support the transition to compulsory reporting, the option for voluntary registration will end for the 2027 to 2028 tax year and beyond. From 6 April 2026, employers will no longer be able to apply for voluntary registration for real-time reporting of benefits in kind.
Policy Objectives and Rationale
Both changes seek to clarify and simplify employer obligations. The exemption for those ceasing trade provides certainty and avoids unnecessary delays in concluding tax matters mid-year.
Meanwhile, removing the voluntary registration route aligns policy with the forthcoming requirement for all employers to report benefits in kind in real time, supporting consistency and reducing the risk of administrative error or confusion. As stated by HMRC, these steps are designed to simplify tax reporting, reduce errors, and close the tax gap.
Final Summary
The forthcoming updates to employer reporting of benefits in kind, effective from April 2026, represent the government’s latest step in modernising and simplifying tax compliance. Employers ceasing trade mid-year will be able to file paper P11D and P11D(b) returns, whilst voluntary registration for real-time reporting will no longer be available as the country transitions to mandatory reporting in April 2027.
The changes are designed to ensure clarity, support administrative efficiency, and prepare employers for an updated tax regime. Employers are advised to review their current processes and remain informed of further developments, which can be tracked using tools such as the Pie app for timely updates and guidance on tax compliance changes.
