The P11D is due to be replaced, and reasons why only 20% of UK SMEs are utilising AI
Today we guide you through the plan for mandatory payrolling for Benefits in Kind as it is set to replace the P11D, and we give you the top 4 reasons why SMEs aren’t utilising AI.
Mandatory payrolling now to be phased in
The announcement of mandatory payrolling for Benefits In Kind was originally expected to start in April 2027, but following industry pressure, it will now be introduced in two phases.
Phase 1 will continue to be rolled out from 6 April 2027, with Phase 2 starting a year later on 6 April 2028. The move to mandatory payrolling will replace the current P11D process for most benefits and move it to real-time processing through a company’s payroll system.
Employers providing employee benefits must provide taxable values through payroll in real-time and apply Income Tax and Class 1A NICs through payroll rather than submitting yearly P11D forms.
Phase 1 of mandatory payrolling from April 2027 will include: company cars, car fuel, vans, van fuel and employer-provided medical benefits.
Phase 2 from April 2028 will include most other Benefits In Kind except beneficial loans and living accommodation. These will continue to be voluntary.
Further guidance is expected by July 2026.
If you need any help with the mandatory payrolling changes, please give us a call. We would be happy to help you.
Only 20% of small businesses use AI regularly
A new report has revealed that only one in five small businesses use Artificial Intelligence on a regularly. Of those that did, they were dominated by telecom and technology companies.
Based on a survey of 1,320 ‘micro’ and small businesses, the ‘UK SME Digital and AI Adoption: The state of play in 2026’ report found that only six per cent have embedded AI into their daily work.
The report was compiled by Enterprise Nation’s Tech Hub in partnership with Google, Sage, Dell Technologies and Square.
How the technology was viewed varied across geographic areas and the size of the company. It also offered contradictory data. Although only 21% of those surveyed used AI regularly, 57% described themselves as highly or moderately digital.
In terms of sector, 74% of information and communication businesses used AI to some degree, while only four and one per cent, respectively, for the construction and agricultural sectors.
Of those firms that had adopted AI early, 65% said their use increased in the past year. The report concluded that early adopters were likely to pull ahead of competitors.
The report warned that the smallest businesses were at the greatest risk of being left behind, with only 34% of one-person businesses using AI at all. Sixty-eight per cent of companies with 50-249 employees, on the other hand, did use AI.
When asked about what held them back from adopting AI:
- 53% said cost.
- 46% cited lack of skills.
- 38% had concerns about privacy and data.
- 37% had a lack of time.
In geographic terms, 30% of London and 27% of Scotland’s Small to Medium-sized Enterprises (SMEs) used AI regularly, compared to only 10% in the North East of England and 6% in Northern Ireland.
Shockingly, the report found that 22% of SMEs in the North East were digitally excluded, with 22% of them mostly offline. A PDF copy of the report can be found at https://a.storyblok.com/f/102007/x/ec83d6c6a3/digital-and-ai-adoption-among-uk-smes.pdf