Year-End P11D Benefits Review: What Employers Should Check Before 5 April 2026

As we approach the end of the 2025/26 tax year, it’s an ideal time for businesses to review employee benefits ahead of the P11D reporting deadline.

While these rules apply to all employers, certain sectors, including farming and rural businesses, may face additional considerations, particularly around accommodation and vehicles. Below are the key areas worth reviewing.

Accommodation Provided to Employees

For businesses that provide living accommodation, job-related accommodation is exempt where it is necessary that employees live on site to successfully perform their duties.

However, employment contracts should clearly reflect this requirement. Extra care is needed where directors or family members occupy company property, as rules are stricter.

In addition, payment of household bills or other related costs may still create a taxable benefit so please get in touch if you think this is relevant to your business.

Company Vehicles – Cars vs Vans

Vehicle benefits remain a key compliance area, and the correct classification is crucial.

Cars are taxed based on list price and CO₂ emissions, whereas vans are taxed based on a fixed amount, often resulting in higher benefit-in-kind charges for cars.

Additionally, ordinary commuting in vans does not count as private use.

Following recent case law, HMRC has tightened its definition of a van. Any vehicle equally suited to carrying passengers and goods is now likely to be treated as a car for benefit purposes. This particularly affects some double cab pick-ups and other utility vehicles commonly used in agriculture and construction.

From April 2025, double cab pick-ups were to be treated as cars for benefit-in-kind purposes. Transitional arrangements are in place for any purchased, leased or ordered before 6 April 2025 where they will be treated as previously until the earlier of a disposal or 5 April 2029.

A review of vehicle classification and private fuel use is strongly recommended before the end of the tax year.

Director’s Loan Accounts

If a director’s loan from a company exceeds £10,000, interest should be charged at least at HMRC’s official rate to avoid a benefit in kind. The interest must be physically paid by 6 July following the tax year end.

Alternatively, leaving the loan interest-free will create a taxable benefit, which in some cases may be the more efficient route. Each situation should be reviewed individually.

Mandatory Payrolling of Benefits from April 2027

Mandatory payrolling of most benefits has been delayed until 6 April 2027. From that date, benefits will generally be taxed through payroll, reducing the need for P11Ds (although some exceptions will remain initially).

Getting systems organised ahead of this change is going to be essential to ensure a smooth transition.  If you would like to register voluntarily for 2026/27 to get systems in place, you will need to do so before 5 April 2026.

Important deadlines

The deadline for filing 2025-26 forms P11D and P11D(b) is 6 July 2026.

The deadline for payment of Class 1A NICs is 19 July, or 22 July, if paid electronically, unless you have ceased trading.

HMRC has mandated electronic filing for forms P11D and P11D(b). Paper returns can no longer be used.

Taking Action Now

A proactive review of your employee benefits can prevent unexpected tax charges and ensure accurate reporting.

If you would like assistance reviewing your benefit arrangements, or submitting the P11D forms, please contact us.