Employee Benefits and “Making Good”: What Employers Need to Know in 2026
Employers often provide employees with equipment or services to help them work more effectively, especially where employees are required to work from home. In many cases, these benefits can be provided without creating a taxable benefit-in-kind, provided certain conditions are met.
However, where a benefit is taxable, employees may be able to avoid a tax charge by “making good” the value of the benefit. Understanding the rules and deadlines is essential to avoid unnecessary tax liabilities.
Homeworking Equipment and Internet Costs
Where employees are required to work from home, employers may provide items such as:
- Office equipment (e.g. desks, chairs, monitors)
- Computers and peripherals
- Reimbursement for increased home internet costs
In many cases, these costs are not treated as taxable benefits for the employee, provided:
- The equipment is mainly used for work purposes, and
- There is no significant private use.
This allows employers to support homeworking without creating additional tax charges for staff.
What Does “Making Good” Mean?
“Making good” refers to situations where an employee reimburses their employer for the value of a taxable benefit.
If the reimbursement is made within the required deadline, the benefit may no longer be taxable, meaning it does not need to be reported as a benefit-in-kind.
This rule commonly applies to benefits such as:
- Private fuel for company cars
- Personal use of certain company assets
- Other benefits that would otherwise be taxable
Deadlines for Making Good Benefits
To remove a taxable benefit for Self Assessment and P11D purposes, the employee must normally reimburse the employer by 6 July following the end of the tax year.
For example:
- Benefits provided during the 2025/26 tax year must generally be reimbursed by 6 July 2026.
This aligns with the P11D reporting deadline.
If the reimbursement is made after this date, the benefit will usually remain taxable.
Special Deadlines for Payrolled Benefits
If benefits are payrolled through payroll, the reimbursement deadlines may differ.
Typical deadlines include:
- 1 June following the tax year for private fuel used in company cars
- 5 April (end of the tax year) for certain other benefits
Employers should ensure they understand the correct deadline for each benefit.
Beneficial Loans and Directors’ Loan Accounts
The “making good” rules do not apply in the same way to beneficial loans.
A taxable benefit can arise where:
-
An employee or director receives a loan from their employer, and
-
The loan balance exceeds £10,000 at any point during the tax year, and
-
Interest is charged below HMRC’s Official Rate of Interest.
To avoid a taxable benefit, the borrower must pay interest at least equal to the official rate set by HMRC.
Although beneficial loans have different rules, it is still best practice to ensure any interest due is paid before the P11D reporting deadline to avoid complications.
Why Employers Should Review Benefits Each Year
Employee benefits can create unexpected tax liabilities if they are not reviewed carefully.
Employers should check each year:
- Which benefits are tax-free
- Which benefits must be reported on P11D forms
- Whether employees need to reimburse benefits before the deadline
This helps ensure compliance with HMRC rules while minimising unnecessary tax charges.
Action Point for Employers and Directors
Before the 6 July reporting deadline, review all benefits provided during the tax year and confirm whether any amounts need to be made good by employees.
