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Employers who provided taxable benefits and expenses to employees in the 2024/25 tax year need to meet compliance obligations in respect of those benefits. The obligations will vary depending on whether the benefits and expenses have been payrolled or not or included in a PAYE Settlement Agreement (PSA).
Payrolled benefits
Where an employer payrolled benefits in 2024/25, those benefits were taxed through the payroll and reported to HMRC under Real Time Information (RTI) on the Full Payment Submission (FPS). Consequently, they do not need to be reported to HMRC after the end of the tax year on the employee's P11D. However, the employer will need to file a P11D(b) and include payrolled benefits when working out their Class 1A National Insurance liability for the year.
Employers must also provide employees with details of their 2024/25 payrolled benefits before 1 June 2025. This can be done on the employee's payslip, by email or by letter.
P11D and P11D(b)
Taxable benefits and expenses which have not been payrolled or included in a PSA must be reported to HMRC on form P11D by 6 July 2025. The employer must also file a P11D(b) by the same date. This is the employer's declaration that all required P11Ds have been filed. It is also the Class 1A National Insurance return.
Forms P11D and P11D(b) must be filed online – HMRC no longer accept paper forms. Employers can use either HMRC's PAYE Online Service (employers with 500 or fewer P11Ds to file only) or a commercial software package. Penalties may be charged if the forms are filed later or are incorrect.
Employers must also provide employees with a copy of their P11D or details of the information contained therein by 6 July 2025.
PAYE Settlement Agreements
An employer can use a PSA to settle the tax due on a taxable benefit on an employee's behalf. However, a PSA can only be used for items that are minor, which are provided irregularly or on which it is not practicable to operate PAYE.
Once made, a PSA is an enduring agreement and remains in place until cancelled by HMRC or by the employer. Where an employer already has a PSA, they should check that it is still valid. If they need to amend it or cancel it, this must be done no later than 5 July 2025. Employers who need to set up a new PSA for 2024/25 must do so by 5 July 2025.
Benefits included within the PSA do not need to be reported to HMRC on form P11D or included in the Class 1A calculation on the P11D(b).
Class 1A National Insurance
Employers must pay their Class 1A National Insurance bill by 22 July if they make the payment electronically. Where payment is made by cheque, it must reach HMRC by Friday 18 July 2025. Interest is charged on payments made late.
Partner note: The Income Tax (Pay As You Earn) Regulations 2003 (SI 2003/2682), regs. 61A – 61M and 85 – 87.