HMRC previously announced that the new mandatory payrolling of benefits would be effective from 6 April 2026. This has now been postponed to 6 April 2027.
From 6 April 2027, employers will be required to include all taxable benefits in kind (currently excluding employer-provided living accommodation and beneficial loans) in their employees’ payroll, so that the tax is collected in real-time, via PAYE.
What are benefits in kind?
Benefits in Kind are any benefits given by an employer to their employees or directors which are not part of the salary or wages. Some of the most common examples of Benefits in Kind include company cars, medical or dental insurance, gym memberships and mobile phones.
What will the updates to payrolling of benefits mean?
The changes announced to the payrolling of benefits this month mean that from April 2027, employers will no longer need to include benefits on a form
P11D or
P46. You will now report and collect income tax directly through your payroll.
Tax on benefits will be calculated and collected in real-time through the payroll, rather than collected via tax code adjustments or P11D submissions.
How does payrolling of benefits in Kind work?
In advance of the mandatory rules coming into effect, employers must ensure their payroll software can handle the payrolling of benefits and accurately calculate the tax and National Insurance contributions arising. Employers must register with HMRC, online, before the start of the tax year in which they will start payrolling of benefits.
While the new rules take effect in April 2027, payroll benefits in Kind are currently an option for all employers. Register for HMRC's Payrolling of Benefits and Expenses online service before the tax year begins.
Get Ahead of the Deadline — Start Payrolling of Benefits Today!
Don't wait until 2027 to make the switch. Take advantage of the extended timeline and begin implementing payroll for benefits. To prepare your business for the changes in 2027, speak to our team at the beginning of the 2026 tax year.