Every summer our finance team spends a fortnight on P11D forms. For each employee with a company car, a van they may use privately, fuel paid for personal use or private medical cover, the form reports the benefit to HMRC, which then adjusts that employee's tax code, often long after the benefit was received. For us that is about two hundred and sixty people, mostly branch managers, sales representatives and drivers who take a van home.
That is about to change. In January 2025 the government confirmed that from 6 April 2027 employers must report most benefits in kind through payroll and take the tax on them from each month's pay, and that the employer's National Insurance on those benefits moves into payroll as well. Employment related loans and living accommodation are left out at first. Company cars, vans, fuel and medical cover are in.
For finance this is mostly an improvement. For IT it turns a once a year data problem into a monthly one. Our P11D figures were assembled each summer from the fleet system, the insurance schedule and HR records, and reconciled by hand until they agreed. Anything wrong in March could be put right in July. From April 2027, the fleet record for each vehicle, meaning its list price, fuel type, emissions, who has it and since when, and whether private use is allowed, feeds the payroll run every month. A van that changes drivers on the twelfth, or a car off the road for repairs, changes somebody's pay that month.
We have started now, with five months to go. Fleet and HR records are being joined on the employee number rather than on a name typed by whoever handed over the keys. Every change of vehicle or of private use permission becomes a dated event, recorded when it happens and sent to payroll before the monthly cut off. And each month until April we are calculating what payroll would have taken, alongside the old process, so that the mismatches turn up while they are still only a spreadsheet.
Tax changes usually look like finance projects. This one depends on every record about a vehicle being right every month, and most of those records live in our systems.
– Serguey Shinder
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