Date posted: 3rd Jul 2026
HMRC has announced a revised phased approach to the introduction of mandatory payrolling of Benefits in Kind (BIKs), delaying the full implementation beyond the original April 2026 start date.
From April 2027, mandatory payrolling will apply only to the most common benefits, specifically company cars and fuel, vans and van fuel, private medical insurance, and other employer-provided medical benefits. These are estimated to represent around 92% of all BIKs currently provided.
For these benefits, employers will be required to report and tax them through payroll via Real Time Information (RTI), removing the need for end-of-year P11D reporting (apart from the requirement to complete a form P11D(b) to report the Class 1A National Insurance due).
All other benefits will remain outside the mandatory regime for the 2027/28 tax year. Employers may continue to report these via P11D, although voluntary payrolling will still be permitted during this transitional period.
Mandatory payrolling of the remaining benefits, including more complex items such as beneficial loans and living accommodation, is not expected to be introduced until April 2028 at the earliest.
This phased implementation is intended to give employers, agents, and payroll software providers additional time to update systems and processes. Further detailed HMRC guidance is expected ahead of April 2027.
Employers should now review their current benefits packages to identify which benefits fall within the April 2027 mandate and ensure payroll systems are capable of handling real-time reporting.
If you would like assistance preparing for these changes or reviewing your current BIK reporting position, please contact us.
