There are causes to celebrate around us all the time. Whether it be a birthday, a new baby or simply the fact that you’re the one to find the last chocolate biscuit in the tin, there is joy to be found in everything. In the world of accountancy, most celebrate on 1st February as another self-assessment tax filing deadline has passed successfully. However, for those of us lucky enough to work in payroll, we have mini celebrations throughout the year.

When HMRC introduced the system of real time reporting (commonly known as RTI) over 10 years ago, it meant that employers had to send information to HMRC every time they paid their employees and failure to do so could result in substantial financial penalties (up to £400 per month). So, each month, it falls on payroll professionals to help employers to calculate the amount due to the employees and report that information to HMRC. Completing these submissions on time, every time is like a mini win and one of the reasons why we love our job.

Another highlight of our job is the amount of contact we have with our clients. It’s an absolute pleasure being a port of call not only for the regular payroll tasks but also being on-hand to answer a myriad of employee-related questions. And having these clear lines of communication is going to be even more important in the future.

We’ve recently completed the annual P11Ds for our clients which were required to report the expenses or benefits that their employees received in the last tax year. Earlier this year, HMRC announced that annual P11Ds will be a thing of the past very soon and that they will be moving to a mandatory real time reporting system for expenses and benefits from April 2026 – this is known as “Payrolling Benefits”.

If you are the director of a limited company, it’s important to realise that you are an employee. Therefore, if the company owns an electric vehicle that you have the use of, you are in receipt of a taxable benefit. Or if the company pays for your own private health insurance, this is also a taxable benefit. Therefore, the changes to the way that benefits are reported to HMRC will affect you as well as any employees that you may have.

At present, HMRC amend employee tax codes to take account of any tax due on an individual’s benefits in kind but, once we move over to payrolling benefits:

• HMRC will amend employee tax codes to take out these adjustments (so most will return to tax codes of 1257L).
• Employee payslips will then include an element of notional pay representing 1/12th of the benefit in kind, and employees will pay tax on it each month.
• The benefit in kind details will then be included on the monthly submissions to HMRC (along with the usual salary and wages payments).
• Finally, at the end of the tax year, employees will be informed of the total taxable benefit they have had in the year and what it was for.

Given this requirement to report expenses and benefits on a real time basis from April 2026, it’s essential that you keep your payroll provider abreast of any changes in this area.

So, if you’re thinking of buying a new car, drop us a line. Not only can we advise you on the most tax-efficient way of purchasing the vehicle, but we also need to know as soon as possible so that we can inform HMRC and avoid any nasty penalties.

Similarly, if you’re considering taking out private healthcare cover or life insurance for yourself or your employees, give us a bell. We can advise on how best to make such payments to ensure that maximum tax relief can be claimed and update HMRC (if necessary).

In short, keep us in the loop!

If you’d like further information regarding our payroll services, please get in touch.