P11D Abolished: What Employers Need to Know Before April 2027
From April 2027, HMRC is abolishing the P11D form and making payrolling of benefits-in-kind mandatory for all employers. This affects every company that provides health insurance, company cars, or gym memberships to employees.
What Is Changing?
From April 2027:
- P11D forms will no longer exist for most benefits
- Tax on benefits must be calculated and deducted through payroll in real time
- Employees will see the taxable value of their health insurance on their monthly payslip
- National Insurance on benefits-in-kind will also be calculated through payroll
Why Does This Matter for Private Health Insurance?
Private health insurance provided by an employer is a benefit in kind equal to the amount the employer pays. Under the old system, a £1,200/year premium was reported on a P11D and the employee paid tax the following year. From April 2027, £100/month is added to the employee's taxable pay through payroll and tax is deducted immediately.
What Employers Must Do Before April 2027
- Register for payrolling of benefits now — HMRC's service is already available; register before the start of the tax year
- Review your payroll software — confirm Sage, Xero or QuickBooks will be ready
- Communicate with employees — their gross pay will appear to increase; explain why net pay is unchanged
- Check your benefit values — you need the monthly premium amount from your insurer
Is Group Health Insurance Still Worth It?
Absolutely. Faster treatment, reduced sick leave, recruitment advantage, and corporation tax relief on premiums — none of that changes. The P11D reform only changes when tax is collected, not how much.
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Last updated: September 2026. This article is for general information only and does not constitute tax advice.