The P11D is on its way out. Here’s what takes its place

If you give anyone a company van, a car, private fuel or medical cover, you’ll have reported it on a P11D every July.

From 6 April 2027 that stops for those benefits.

Instead the taxable value goes through your payroll on every pay run, on the Full Payment Submission, sitting alongside wages. Income tax and the employer’s Class 1A National Insurance, both in real time.

What’s actually changing

The Budget on 28 October confirmed the date. It had already slipped once, from April 2026, so I’d treat this one as firm.

What’s in, and what isn’t

Phase one from 6 April 2027 covers company cars, car fuel, vans, van fuel, and employer-provided medical and dental cover. The common ones, in other words.

Most of the rest follows in April 2028. Gym memberships, non-cash vouchers, phones that fall outside the exemption.

Two are staying out for now. Beneficial loans, which for most of our clients means a director’s loan charged below the official rate, and employer-provided accommodation. HMRC will set a date for those later.

So 2027-28 is a split year for a lot of employers. Some benefits on payroll, a shorter P11D still going in for whatever’s left.

The bit that catches employers out: Class 1A

Today you pay Class 1A once a year, by 22 July after the tax year ends if you pay online.

From April 2027 the Class 1A on payrolled benefits goes out monthly with your PAYE.

Which means in 2027-28 you pay for two years. The 2026-27 Class 1A still lands in July 2027 on the old timetable, and the 2027-28 Class 1A is already going out month by month from the April payroll.

Five vans, on this year’s figures

Say you run five vans, each available for private use with the firm paying for private fuel.

In a normal year that’s one payment in July. In 2027-28 it’s that July payment for the old year, plus roughly the same again spread across twelve payrolls for the new one.

Call it £7,450 leaving the bank in twelve months instead of £3,726.

It isn’t extra tax. It’s the same money arriving a year earlier, once, and then settling into the new rhythm. But it’s real cash, it lands in the same year as the National Living Wage rise, and it’s a lot easier to plan for now than to find in July 2027.

Those are 2026-27 charges, by the way. They’re uprated every April, so the 2027-28 numbers will be a bit higher.

What your staff will see

For employees the tax usually isn’t new. Most benefits are already collected through the tax code in twelfths, so the amount coming off is roughly what it was.

What changes is where it shows up. It moves from an invisible code adjustment to a line on the payslip, and people notice lines on payslips.

Two things worth watching in the first year.

Check the 2027-28 coding notices when they come out. If HMRC leaves the benefit in someone’s code as well as it going through payroll, they’re paying twice until somebody spots it.

And anyone who picks up a van part way through the year gets the catch-up squeezed into the remaining pay runs, so the hit per payslip is bigger than it would have been from April.

The 50 per cent rule

PAYE can’t take more than half of what someone is paid in a pay period. Anything above that carries forward.

On a full-time wage it hardly comes up. It comes up a lot if you’ve got someone part time, or on low hours, with a van or a car.

Those are the people to run through the numbers before April, not after.

Loans and accommodation: a decision to make by 5 April 2027

These two aren’t compulsory, but you can choose to payroll them from April 2027 if you register with HMRC first. The service is expected to open this month.

So the choice is: payroll them voluntarily and be finished with P11Ds altogether, or keep filing one every July for those items alone.

If the only thing standing between you and no more P11Ds is a single director’s loan, my view is register and clear the decks.

What I’d do between now and April

Four jobs. None of them urgent today, all of them miserable if they’re left until March 2027.

List what you actually provide. Not what the payroll file says, what people actually have. Vans that go home with the driver every night are the usual surprise.

Ask your payroll software provider when their update arrives. HMRC is handing the technical specification to software houses this autumn, so they should be able to give you a straight answer.

Model the cash. The double Class 1A year is the one that bites.

Tell your people before it appears on a payslip rather than after.

HMRC has said it’ll take a light touch on penalties through 2027-28, as long as errors aren’t deliberate. That’s welcome, but it won’t help you if your software isn’t ready or your benefit records are wrong.

One last thing

If you’ve been meaning to tidy up who has what, this is the moment. Payroll reporting is monthly and visible, and a benefit that’s been quietly wrong on a P11D for years gets a lot harder to leave alone once it’s on twelve payslips.