Dealing with employees who leave during the tax year
Source: gov.uk (2025-11-26)

Dealing with employees who leave during the tax year – including in year corrections and expenses which could not be accounted for during the year.

If a correction needs to be made for an employee that has left, then an amendment will need to be made to what has previously been reported. Read the existing guidance on how to fix problems with running payroll when you paid your employee the wrong amount or made incorrect deductions (https://www.gov.uk/payroll-errors/correcting-pay-or-deductions). This guidance will be updated at Autumn 2026 for mandatory payrolling.

In year corrections

In year corrections for benefits in kind (BiKs) may need to be made for many reasons. For instance:
- the taxable value of a benefit in kind (BiK) changes in year
- a BiK is provided earlier in the tax year but not accounted for until later in the year
These changes should be accounted for in future Full Payment Systems (FPSs) within the tax year. Where this is not possible, the tax and National Insurance contributions can instead be accounted for using the end of year BiKs update process. Where the end of year BiKs update process applies, the final FPS will need to be amended.

Employers must always report a BiK and the correct taxable value for a BiK, or a reasonable estimate, either:
- when they become aware of the provision of a BiK and its taxable value
- where there is a change in circumstances such that the taxable value changes then employers will need to revisit the value being payrolled and recalculate the taxable value to be payrolled across the remainder of the tax year
HMRC have been consulting with a number of leading payroll software providers during the development of the IT processes for mandating payrolling of BiKs. Technical specifications will be made available to software developers in November 2025 to enable software providers to update their software to comply with HMRC specifications.

If an employer chooses to revise a previous Full Payment System (FPS), read to the current guidance on correcting your FPS (https://www.gov.uk/payroll-errors/correcting-your-fps-or-eps). This guidance will be updated for mandatory payrolling.

BIKs and expenses which could not be accounted for during the year

A BiKs update process will be introduced for mandatory payrolling. The BiKs update process can be used to record any under or over-reporting of BiK data after the end of the tax year. Where this process is used, all BiKs must be reported by 22 July following the end of the tax year. The additional tax due or repayable will be taken into account in the end-of-year reconciliation process (P800), Simple Assessment or Self Assessment. Any additional Class 1A National Insurance contributions due will be payable by 19 July (or 22 July if paying electronically) following the end of the tax year.

This process can also be used for employees who use their own car and pay for fuel using a fuel card. They will also be required to have the taxable value reported in real time. If there is an under or over payment of tax due to monthly statements not being received by the employer, this can be corrected using the BiKs update process explained previously in this chapter.

More information about this process will be provided in future updates.

Mileage Allowance Relief Optional Reporting Scheme (MARORS)

If an employee is entitled to claim Income Tax relief for using their vehicle for business purposes, known as Mileage Allowance Relief (MAR), their employer may voluntarily agree with HMRC to operate the Mileage Allowance Relief Optional Reporting Scheme (MARORS).

MARORS enables employees to receive MAR they are entitled to without having to make individual claims to HMRC.

This reporting scheme is under review. We will provide updates on this in due course.