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Employee benefits are reported to HMRC either on a Form P11D or via a PAYE Settlement Agreement (PSA).
We cover everything employers need to know below.
An employer is required to prepare a Form P11D and submit this to HMRC to report taxable benefits in kind provided to its employees in the tax year. A copy of the form must also be given to the employee.
In most cases, the benefit amount is chargeable to employer Class 1A National Insurance Contributions (NIC) and this is reported to HMRC on the employer declaration Form P11D(b). However, there may be exceptions to this charge, typically when the employee is not within the scope of NICs, or when the benefit is chargeable to Class 1 NICs (reported in the payroll).
The rate at which Class 1A NICs are charged for the tax year 2024/25 is 13.8% (the increased rate of 15% will apply to benefits provided after 5 April 2025).
The employee will be liable for any income tax due on the benefit, and this is usually settled through an adjustment to the employee’s tax code or via their self-assessment tax return.
Employers must settle the Class 1A NIC liability by the due date, which is 22 July 2025 following the end of the tax for online payments, and 19 July 2025 if paying through the post.
Employers can pay this online by bank transfer, direct debit, or with a credit card or corporate credit card. The liability may also be paid by cheque through the post or telephone banking.
Please see the following deadlines for the 2024/25 tax year.
| Deadline Date | Action |
| 6 July 2025 |
|
| 19 July 2025 | If paying by cheque, pay Class 1A National Insurance to HMRC. |
| 22 July 2025 | If paying online, pay Class 1A National Insurance. |
HMRC can charge statutory and tax-geared penalties for the late submission of Forms P11D and P11D(b), or the filing of inaccurate forms.
Failure to file forms and settle liabilities on time can lead to an increased risk of being selected for an employer check of records. It may also impact the gross payment status for businesses within the Construction Industry Scheme.
HMRC can charge penalties for the late filing of Forms P11D. The amount of penalty is £100 per every 50 employees for each month or part month a form remains outstanding.
Additionally, the First Tier Tribunal has power to levy a further penalty of £300 per form and additional £60 per day where the forms remain outstanding.
HMRC can charge penalties for the filing of inaccurate Forms P11D and Form P11D(b).
The amount of penalty HMRC can charge for an incorrect Form P11D is up to £3,000 per form, although these are rarely levied in practice.
The penalty for the filing of an inaccurate Form P11D(b) is £100 per 50 forms. HMRC may also charge a tax-geared penalty based on the underpaid amount of Class 1A NIC.
HMRC charge penalties when the Class 1A NIC liability is not settled by the due date. The amount of penalty charged is 5% of the liability that is not settled within 30 days of the due date.
A further 5% may be charged on the outstanding liability after six months of the due date, and another 5% charged after 12 months.
HMRC charge late payment interest on Class 1A NIC liabilities not settled by the due date.
A PSA is an agreement between the employer and HMRC to report and pay tax on certain employee benefits and taxable expenses. These agreements are particularly helpful if the employer wants to ensure employees are not financially disadvantaged.
Usually, a PSA must be agreed with HMRC within 90 days after the end of the tax year which they wish to report. Once a PSA is agreed, this remains in place until the either employer or HMRC cancel it.
New categories for PSAs should normally be agreed with HMRC prior to an expense or benefit being provided or within 90 days of the end of the tax year for benefits and expenses that are not included in the employee's tax code or should have been reported under PAYE.
Items that can be included on a PSA must be:
The employer is required to prepare a calculation of the benefits provided and the Income Tax and NIC liabilities and submit this to HMRC. A separate calculation is required for each employee population by devolved nation.
Under a PSA, the employer settles the income tax arising on behalf of the employee on a grossed-up basis and employer Class 1B NICs.
The due dates for payment are 22 October 2025, if paying online or 19 October 2025, if paying by post.
Please see the following timeline including deadlines for the 2024/25 tax year.
| Deadline Date | Comments |
| 5 July 2025 | Apply to HMRC for a PSA for the first time, or to request an additional category to be added to an existing PSA. |
| 31 July 2025 | Submit your PSA calculation for tax year 2024/25 to HMRC. |
| 19 October 2025 | If paying by cheque, pay Class 1B National Insurance to HMRC. |
| 22 October 2025 | If paying online, pay Class 1B National Insurance to HMRC. |
There are no statutory penalties for the late filing of PSA calculations.
However, if the employer does not submit its PSA calculation to HMRC by the filing deadline, HMRC will issue a Regulation 110 Determination for the income tax and Class 1B NIC liabilities it estimates are due.
HMRC can also revoke the PSA agreement, typically when there are persistent compliance failures.
HMRC may charge a late payment penalty of 5% calculated on the outstanding income tax and Class 1B NIC liability if this isn’t settled within 30 days of the due date.
HMRC may charge another 5% penalty if the liability is outstanding after six months from the due date, and a further 5% penalty if the liability is still outstanding for more than 12 months from the due date.
HMRC charge late payment interest on any amounts of income tax and Class 1B NIC that are outstanding after the due date.
If you would like assistance with preparing or checking your Forms P11D or PSA, please get in touch with Dino Jangra or your usual Crowe contact.
Following the Autumn Budget, the Government announced that payrolling benefits-in-kind will become mandatory starting April 2026 for all non-cash benefits apart from beneficial employer provided loans and living accommodation. Precise details are still to be finalised by HMRC.
This means that for the majority of employee benefits, P11Ds will no longer be required to be submitted to HMRC. Employers may want to give thought to how the changes may impact them and start planning for the changes.
At Crowe, our employment tax specialists can guide you through the changes to ensure you have robust systems and policies in place that are underpinned by sound governance.
From 6 April 2025, most double cab pick-up (D-CPU) vehicles with a payload of one tonne or more will no longer be treated as goods vehicles but will instead be cars for BIK purposes.
The primary purpose of the vehicle will determine how its treated for tax purposes. As most D-CPUs don’t have a primary purpose as they are suited to convey both passengers and goods, they will be treated as cars for calculating the benefit charge.
For existing drivers of D-CPUs, there are transitional arrangements in place. Where employees are using DCPU’s purchased, leased or ordered on or before
5 April 2025, their employer will still be able to treat vehicles with a payload of more than one tonne as vans until either the vehicle is disposed of, or until 5 April 2029.
It is also reported that HMRC will allow these transitional rules to apply to existing D-CPUs that are reallocated to another employee after 5 April 2025.
The Official Rate of Interest (ORI) is 2.25% for the 2024/25 tax year. This rate is used to calculate the taxable benefit of taxable employer-provided accommodation and, on employer provided loans in excess of £10,000.
If a vehicle was not used privately during a period in the tax year, there may be an opportunity to reduce the benefit in kind charge.
A car or van benefit is not charged for periods of unavailability to the employee for private use.
As long as the period lasts for 30 or more consecutive days, the car benefit is reduced in proportion to the number of days when the car is unavailable. However, to prove that the vehicle was not available for private use, HMRC would want assurance that an employee had no way of driving the vehicle during the period. This may have been for example because they handed their keys back to their employer. Otherwise, regardless of whether the car is actually being used, it is considered to be available for private use, hence taxable and reportable on the employee’s form P11D.
For more information about the upcoming changes and how these could impact you, or your current employer Form P11D or PSA compliance, please contact Dino Jangra or your usual Crowe contact.
