FEATURE
All change for P11D
Ahead of the mandatory move to payroll all Benefits-in-Kind (BiKs) by April 2026, Cheryl Clements, business development manager at Tusker – and an expert on P11Ds – looks at why it’s so important for employers to start preparations early
The clock is ticking. By April 2026, all UK employers must payroll Benefits-in-Kind (BiK), marking the end of the traditional P11D form as we know it. On paper, this shift towards real-time taxation promises simplicity and modernisation. But beneath the surface, it’s a complex transformation that demands immediate attention from HR and finance teams.
This isn’t just a compliance update – it’s a strategic shift in how benefits are managed, reported and understood across the workforce. And those who leave preparations to the last-minute risk more than a few payroll headaches. Errors, HMRC penalties, employee confusion and strained internal resources are all on the line if organisations aren’t ready in time.
Back to basics
Traditionally, most employers have reported BiKs annually via manual P11D forms or P46(Car) submissions, often relying on employees themselves to communicate tax information to HMRC. This system, though familiar, has long been inefficient and prone to errors.
From April 2026, however, benefits such as company cars, private medical insurance and more must be taxed in real time through payroll. That means tax will be applied when employees are paid – bringing BiK into the same pay cycle as salaries and bonuses. It’s a cleaner, more transparent approach but one that introduces new complexities.
It’s important to note that while the traditional P11D form is being phased out, P11D(b) forms – used to report Class 1A National Insurance Contributions – will still need to be submitted annually. The change is not as binary as some headlines suggest, and misconceptions here could confuse even experienced HR professionals.
Software systems: fit for the future?
At the heart of this reform lies technology. Many current payroll systems aren’t fully equipped to handle the nuances of BiK payrolling. This is especially true for salary sacrifice schemes, where the interaction between gross pay, taxable benefit value and National Insurance contributions becomes more complex.
For some employers, this will require a complete overhaul of their payroll software. For others, it may require substantial upgrades or integrations. Those outsourcing payroll shouldn’t assume they’re off the hook. It’s essential that external providers fully understand the implications of real-time BiK taxation and can deliver compliance from day one. These conversations should be happening now, not in 2026 when every business in the UK will be clamouring for the same support.
Communicating change internally
The success of this transition isn’t just about systems – it’s about people, too. One of the most overlooked aspects of the BiK payrolling shift is how it will affect employee understanding and, potentially, morale.
Consider car schemes under salary sacrifice arrangements. With BiK tax now deducted at source, employees may notice subtle changes to their take-home pay. If not communicated clearly, this could cause confusion, concern or even resistance. HR teams should be proactive in briefing staff about what’s changing, when it’s happening and what it means for their pay. Crucially, employees must understand that they do not need to take any action – the responsibility lies with the employer. Transparent, early communication will go a long way in maintaining trust and avoiding unnecessary worry.
“It’s important to note that while the traditional P11D form is being phased out, P11D(b) forms – used to report Class 1A National Insurance Contributions – will still need to be submitted annually”
Cheryl Clements
business development manager Tusker
More than compliance
There’s a tendency to view the 2026 reform as a purely technical update. But in reality, it’s a chance for organisations to take a step back and reassess their entire benefits strategy. As BiKs become more integrated into payroll, visibility increases. This opens the door for smarter cost management, streamlined processes and a more strategic approach to total reward offerings. Employers that seize this opportunity can enhance their competitiveness in the talent market while also ensuring compliance.
Equally, forward-thinking organisations may use this shift to explore new types of benefits that align more closely with employee expectations and business priorities. Whether it’s electric vehicle salary sacrifice schemes, wellbeing allowances or other flexible perks, aligning your benefits strategy with this new framework can create long-term value.
While 2026 may feel like a distant deadline, the changes it brings will require operational, technological and cultural shifts. Employers that prepare early will enjoy a smoother transition, avoid costly penalties and be better placed to offer a compelling, future-proof benefits package.
The best advice? Set internal deadlines well ahead of the statutory date; aiming for October 2025 is considered sensible. Engage with payroll providers, audit all systems, train necessary teams and open up honest conversations with the workforce.
Payrolling BiKs may be mandatory, but how well you handle it is entirely in business leaders’ hands.
A compelling case for V2G and smart charging
Natalie Middleton
A study by EY and Eurelectric on the benefits of smart vehicle charging solutions, such as time-of-use tariffs and selling surplus energy back to the grid, found that EV drivers in the UK could save more than £10,000 over seven years based on a large electric model.
The analysis found that owners of compact EVs could save more than £700 annually by charging their vehicles at off-peak times through time-of-use tariffs agreed by electricity suppliers, and selling energy back to the grid through bidirectional V2G and vehicle-to-home (V2H) charging.
Meanwhile, owners of family EVs, including medium-sized cars such as saloons, could save more than £1,000 per year, while the owners of large EVs such as SUVs could save as much as £1,475 annually by utilising optimised flexible charging solutions.
The study also indicates significant potential for energy storage, revealing that based on projections around EV uptake and battery size, EVs in the UK could supply the equivalent of up to 24 terawatt hours (TWh) of the nation’s battery capacity by 2030 back to the grid. This is equal to 7.5% of the UK’s overall electricity demand in 2023, according to government figures, and could mitigate energy usage at peak charging times. However, this is contingent on all EVs having the capability to send energy back to the grid, and consumers having the knowhow to optimally utilise V2G technologies.
EY said the study provides a compelling case around how V2G and smart charging solutions could enable consumers and electricity transmission and distribution grids to collaborate, helping to reduce EV running costs and optimise grid capacity.
But it warned that the UK has hurdles to overcome to unlock full potential of bidirectional charging, adding that V2G infrastructure remains relatively sparse and expensive, and will need to be ramped up if a smooth and successful EV transition is to materialise.
EY also said the UK is still navigating challenges associated with the double taxation of energy storage, which currently remains a significant barrier for the progress and deployment of V2G and bidirectional charging. Other European countries, including Spain and Sweden, have already eliminated this tax, but it currently remains a hurdle for the UK.
The study also highlights the need for the value proposition of EVs to be carefully considered, beyond just financial costs. For example, robust business models that demonstrate the financial viability of V2G are essential, and for consumers, solutions need to be simple to use, with clear and accessible benefits.
“With the UK’s EV market share still not quite keeping pace with regulatory requirements, this study highlights the critical role that smart charging could play in helping more households make the switch to an EV,” says Lee Downham, energy and resources lead at EY in the UK. “Furthermore, with storage of clean energy increasingly a limiting factor in the UK achieving its net zero ambitions, technologies like this could provide essential access to the significant capacity that EVs provide to the grid.”
A compelling case for V2G and smart charging
Natalie Middleton
A study by EY and Eurelectric on the benefits of smart vehicle charging solutions, such as time-of-use tariffs and selling surplus energy back to the grid, found that EV drivers in the UK could save more than £10,000 over seven years based on a large electric model.
The analysis found that owners of compact EVs could save more than £700 annually by charging their vehicles at off-peak times through time-of-use tariffs agreed by electricity suppliers, and selling energy back to the grid through bidirectional V2G and vehicle-to-home (V2H) charging.
Meanwhile, owners of family EVs, including medium-sized cars such as saloons, could save more than £1,000 per year, while the owners of large EVs such as SUVs could save as much as £1,475 annually by utilising optimised flexible charging solutions.
The study also indicates significant potential for energy storage, revealing that based on projections around EV uptake and battery size, EVs in the UK could supply the equivalent of up to 24 terawatt hours (TWh) of the nation’s battery capacity by 2030 back to the grid. This is equal to 7.5% of the UK’s overall electricity demand in 2023, according to government figures, and could mitigate energy usage at peak charging times. However, this is contingent on all EVs having the capability to send energy back to the grid, and consumers having the knowhow to optimally utilise V2G technologies.
EY said the study provides a compelling case around how V2G and smart charging solutions could enable consumers and electricity transmission and distribution grids to collaborate, helping to reduce EV running costs and optimise grid capacity.
But it warned that the UK has hurdles to overcome to unlock full potential of bidirectional charging, adding that V2G infrastructure remains relatively sparse and expensive, and will need to be ramped up if a smooth and successful EV transition is to materialise.
EY also said the UK is still navigating challenges associated with the double taxation of energy storage, which currently remains a significant barrier for the progress and deployment of V2G and bidirectional charging. Other European countries, including Spain and Sweden, have already eliminated this tax, but it currently remains a hurdle for the UK.
The study also highlights the need for the value proposition of EVs to be carefully considered, beyond just financial costs. For example, robust business models that demonstrate the financial viability of V2G are essential, and for consumers, solutions need to be simple to use, with clear and accessible benefits.
“With the UK’s EV market share still not quite keeping pace with regulatory requirements, this study highlights the critical role that smart charging could play in helping more households make the switch to an EV,” says Lee Downham, energy and resources lead at EY in the UK. “Furthermore, with storage of clean energy increasingly a limiting factor in the UK achieving its net zero ambitions, technologies like this could provide essential access to the significant capacity that EVs provide to the grid.”
