New payrolling of Benefits-in-Kind (BIK) system: A guide for SMEs
From April 2026, small and medium-sized businesses will be required to
report and pay taxes on employee benefits like company cars and accommodation
directly through their payroll software.
This change eliminates the need for separate paperwork and simplifies the
process.
Ultimately, the goal is to make managing employee benefits more efficient
while reducing administrative hassles for SME owners.
Benefits-in-Kind (BIK) refers to the non-cash benefits
provided to employees, such as company cars, accommodation, or beneficial
loans.
Starting in 2026, you’ll need to report and pay Income Tax and Class 1A
National Insurance Contributions (NICs) on these benefits via your payroll
software.
The good news is that this change is designed to simplify your
administrative burden.
You can say goodbye to the separate P11D and P11D(b) forms.
Everything will be integrated into your payroll system, reducing paperwork
and making your financial management more efficient.