Perks, Poolside Dreaming, and the Tax Rules You Can’t Ignore

Summer is here, P11D season is upon us, and somewhere out there a founder is asking ChatGPT whether they can expense their Maldives trip!

This month we’re covering what you need to know about employee benefit reporting, why your holiday is still your own problem, why your AI tool is not your accountant — and what all of this means for your business right now.

P11D Deadline: If You Give Your Team Private Healthcare, Read This Now

One of the most common benefits tech companies and gaming studios offer to attract and retain talent is private medical insurance.

It’s a great perk, but HMRC doesn’t let it slide quietly past your tax bill. If you provide any benefits to employees, you have a filing deadline coming up fast.

The deadline is 6 July 2026.

This is the date by which P11D forms must be submitted to HMRC, covering all taxable benefits provided to employees during the 2025/26 tax year. Class 1A National Insurance Contributions must then be paid by 22 July 2026 if you’re paying electronically.

What is a P11D?

A P11D is the HMRC form employers use to report benefits-in-kind, the extras your team receives on top of their salary that haven’t been taxed through their payroll.

You’ll also need to submit a P11D(b) — this is a separate form sent to HMRC to declare the total number and value of all benefits provided to employees across your business, and it’s the figure HMRC uses to calculate the Class 1A NICs you owe as an employer.

Think company cars, gym memberships, interest-free loans, and private medical insurance. If it has a monetary value and it hasn’t been processed through payroll, it almost certainly needs declaring.

The reason this matters to founders and directors is twofold.

Your employees become liable for Income Tax on the value of those benefits at their marginal rate. And you, as the employer, become liable for Class 1A National Insurance Contributions on those same values — currently charged at 15% from April 2025, up from 13.8% the previous year.

Neither is optional, and the penalties for missing the deadline are automatic.

The private medical insurance catch most companies miss

Here’s where we see the most genuine surprise. A business decides to offer the team private health cover — a brilliant, competitive benefit in a tight hiring market.

But the moment that premium is paid by the company, it becomes a benefit-in-kind that must be declared and taxed.

Say you pay £1,200 per year for an employee’s private health cover. That £1,200 is the taxable benefit value.

The employee owes Income Tax on it at their marginal rate. You as the employer owe Class 1A NICs at 15% on top of that — so a £1,200 premium costs you £1,380 in real terms, per employee, per year.

Worth knowing before you build it into your benefits package.

Your key P11D dates for 2025/26

• 6 July 2026 — P11D and P11D(b) forms must be submitted to HMRC. Employees must also receive their P11D or be notified of their benefit values by this date.
• 22 July 2026 — Class 1A NICs must be paid to HMRC electronically. Late payment triggers penalties that escalate the longer the amount remains unpaid, starting at 5% of the total due, and rising further at six and twelve months, with interest added on top.
• Late filing penalty — £100 per 50 employees for each month the submission is overdue.

What’s coming next: mandatory payrolling from April 2027

The bigger picture worth flagging: mandatory payrolling of benefits-in-kind is arriving in April 2027, delayed from the originally planned April 2026. From that point, benefit values will need to be reported and taxed in real time through your payroll — not via the year-end P11D process.

P11D forms are still required for 2025/26 and 2026/27, but the form’s days are genuinely numbered. Now is a good time to review your payroll setup and get clear on exactly which benefits you’re providing and how they’re being handled.

If you’re unsure whether your benefits have been correctly reported — or whether payrolling might already apply to you — get in touch before 6 July. There’s still time to get this right.

Can You Expense Your Summer Holiday? (Spoiler: No. Well… Sort Of.)

Every July, without fail, we have a version of this conversation. “I was in Marbella, I sent a few emails, I had one call with a client — can I put the trip through the business?”

The honest answer is almost certainly no. But let’s talk through where the genuine grey areas are, because they do exist.

The rule

HMRC’s position is clear: expenses must be incurred “wholly and exclusively” for the purposes of your trade. A week in Santorini with your family where you answered a handful of Slack messages does not meet that test. The primary purpose of the trip is leisure, and HMRC takes a dim view of attempts to reclassify it. The burden of proof sits entirely with you.

Personal holidays — regardless of how much you worked while you were there — cannot be claimed as a business expense.

The grey areas that actually exist

HMRC does allow a reasonable apportionment where you can clearly identify and evidence a genuine business element within a trip. The key phrase there is clearly identify.

If you flew to Barcelona specifically for a confirmed client meeting — you have the meeting notes, the client correspondence, the booking confirmation — and then took a day of holiday before flying home, the situation becomes more nuanced. The holiday portion stays personal. But the flight and the business day’s accommodation? Potentially claimable, with an excellent paper trail and a clear primary business purpose for the trip.

The operative test is intention. If a trip is primarily a holiday, you’ll only ever be able to claim the marginal business costs — and you need receipts, correspondence, and a clear documentary trail to support it.

What you cannot claim under any circumstances:

• The personal portion of any trip where leisure was the primary purpose
• Family members’ flights, accommodation, or activities — even if they join you on a genuine business trip
• Any costs where you cannot clearly separate and evidence the business element

HMRC has been known to cross-reference airline records to check who travelled and whether family came along. If a non-employee joins you on a trip you’re claiming as business travel, their portion cannot be claimed — and the scrutiny that follows could cost far more than a week in the sun.

Keep your holiday a holiday. Your tax position — and your peace of mind — will both thank you.

AI Accountants: Useful Tool, or Are You Gambling With an HMRC Penalty?

We work with tech founders and gaming studios. We know you’re using AI. Half of you have probably already asked ChatGPT a tax question this month — and we’re not going to pretend otherwise or tell you to stop.

What we are going to do is be honest about what AI can and can’t do, because the answer genuinely matters when HMRC is involved.

What AI is genuinely good at

AI is already embedded in modern accounting practice, including ours. Bookkeeping automation, invoice processing, data reconciliation, VAT return drafting — these are tasks that AI-assisted tools handle faster and more accurately than a human doing them manually.

The profession has embraced these tools because they free up time for the work that actually requires expertise and judgment.

AI does well at:

• Automating data entry, reconciliation, and invoice processing at scale
• Drafting routine financial reports and summarising data quickly
• Tax research — retrieving information from legislation and HMRC guidance
• Flagging anomalies and patterns across large datasets
• High-volume, rule-based compliance tasks, processed at speed

Where AI falls short

There is a hard line, and it’s worth being clear about where it sits.

AI falls short when it comes to:

• Applying tax law to your specific circumstances with professional judgment
• Signing off on filings — and accepting legal responsibility for them
• Detecting fraud, intent, or unusual business context that requires understanding
• Strategic tax planning tailored to your growth stage and company structure
• Giving advice that a regulator, HMRC, or court would accept as professionally accountable

The liability point no one talks about

AI can produce an incorrect answer without any warning — referencing the wrong section of the tax code, misquoting a rate, or generating a figure that looks entirely plausible but is simply wrong. In a tax context, the polite term for this is a hallucination. The accurate term is risk.

If you rely on that answer and submit it to HMRC, the penalty does not fall on the software. It falls on you.

No AI tool holds professional indemnity insurance. No AI tool can be held accountable by ICAEW or HMRC. The legal and financial responsibility always stays with the human in the loop — which is exactly why that human needs to be a qualified one.

So what’s the right model?

Honestly, AI in accounting is a genuinely exciting development and we’re not going to pretend otherwise. ACCA’s 2026 professional guidance confirms that AI is already widely used across tax compliance, report drafting, and high-volume processing — and that’s only going to deepen.

But the right model is: AI does the retrieval, the accountant does the judgment. Not AI instead of an accountant.

For tech founders especially: you wouldn’t ship untested code to production and assume it’s fine. The same logic applies to your tax position. Use AI as a tool in your workflow — but have someone qualified review, own, and sign off on what matters.

If your accountant’s main pitch is that they use AI, ask what their qualified human adds on top of it. The answer to that question tells you everything about the value you’re actually getting.

Got questions about your P11D, your benefits position, or how your accounting should actually be working for your business? Get in touch with the ChadSan team →