Weybridge-based accountancy firm, TWP Accounting, has urged employers to keep an eye out for upcoming changes to benefit reporting for tax purposes, set to come into effect in April 2026.

Employers offering taxable benefits – benefits-in-kind (BIKs) – to employees will need to report these to HM Revenue & Customs (HMRC) for tax purposes via existing payroll systems.

This is in opposition to the existing P11D form, which enables batch reporting at the end of each financial year – used by many business owners, particularly those with incompatible payroll software.

From April 2026, the option to report taxable benefits via P11D will be removed, although employers will still be required to report Class 1 National Insurance liabilities via P11D(b).

Despite making the move to simplify the tax process, cautioned the firm, HMRC is likely to be faced with a short-term spike in confusion from business owners as they seek to navigate the new landscape.

Emma Strugnell, Client Payroll Manager at TWP, said: “This new measure of reporting benefits-in-kind for employees exclusively via payroll will undoubtedly cause some businesses to face challenges.

“Some payroll software, particularly packages favoured by the smallest businesses, lack the capacity to process benefits, and we’re obviously seeing a reduction in the flexibility offered to employers.

“However, in the long term, it’s likely that we’ll see the benefits of the move, particularly with regards to data as all payroll data is stored and shared in the same place.

“As with any number of other efficiency initiatives, this change is likely to be a case of short-term costs for long-term gains.”

TWP further urged employers to contact a member of its payroll team to discuss further support for payrolling benefits-in-kind.