HM Revenue and Customs Announces Changes to Company Car Benefit-in-Kind Reporting
HM Revenue and Customs is making significant changes to the way benefit-in-kind reporting for company cars is handled. The new reforms, set to take effect on 6 April 2026, will require employers to report the value of any workplace benefits to HMRC through their payroll software on a more frequent basis.
Under the new system, employers will need to report the value of any additional benefits provided to employees, in addition to their regular salary, through their payroll software. This change will require employers to collect any tax owed at the same frequency as employees are paid, even if that means collecting tax on a weekly basis.
While some employers have already transitioned to this new system, many still collect benefit-in-kind information monthly and report using a P11d form at the end of the financial year. With less than 18 months to comply with the new regulations, companies are facing tight deadlines to implement the necessary changes.
Simon Down, director at Deloitte’s employment tax automotive team, has highlighted the potential administrative challenges that may arise from the new reporting requirements. Ensuring accurate and timely reporting of vehicle changes, including downtime for repairs and courtesy car loans lasting more than 30 days, will be crucial to avoiding costly mistakes.
The reforms also impact salary sacrifice schemes, where employees pay for their lease costs out of their pre-tax salary. Cheryl Clements, head of business development at Tusker, emphasizes the benefits of payrolling benefits, such as providing drivers with more transparent monthly costs and reducing the risk of backdated tax bills.
Businesses have until the start of the tax year on 6 April to register for the new system. Clements advises opting in early to avoid any last-minute rush and ensure a smooth transition. By reaching out to HMRC and working closely with their payroll team or provider, companies can effectively navigate the changes and ensure compliance with the new regulations.
