Payrolling benefits in kind is being introduced in a phased process, through stages and not rushed.
For businesses providing company cars, private medical cover or other perks to staff, you can find out about the expected timeline in this post, and what you need to do to stay up to date.
How are the changes to payrolling benefits rolling out to businesses?
From 6th April 2027, mandatory payrolling kicks in, with most other benefits following from 6th April 2028. Loans and accommodation stay outside the mandatory rules for now, though you can still choose to payroll them voluntarily.
Phase 1 (from 6th April 2027)
Payrolling will become mandatory for company cars, car fuel, vans, van fuel and employer-provided medical (and dental) benefits.
It’s important to remember that the Income Tax and Class 1A National Insurance on these benefits must be reported and paid in real time through your payroll.
Phase 2 (from 6th April 2028)
During this period, most remaining business benefits, such as gym memberships, non-cash vouchers and mobile phones outside the exemption, will be moved into mandatory payrolling.
What about loans and accommodations?
Interest-free or low-interest loans and employer-provided living accommodation will stay outside the mandatory payrolling for the foreseeable future. For those who continue to report them, you can do so on a P11D or payroll them voluntarily if you choose.
HMRC has said it will publish a timetable for bringing these in later.
The benefits of delaying the payrolling benefits changes
The Association of Taxation Technicians has called this a “welcome step,” and it’s easy to see why.
Payrolling in real time means the tax on a benefit gets collected through the month, rather than estimated and adjusted later through a tax code, which is often where things go wrong.
Switching over needs clean data and payroll systems ready to cope, and a staggered roll out gives employers, and their payroll software, time to get it right rather than scrambling.
For guidance in payroll and benefits, feel free to contact us today to discuss further.
Your next steps for payroll
It’s crucial that you still file P11Ds for 2025/26, 2026/27, and for any benefits that haven’t moved into mandatory payrolling yet.
To get ahead of the curve, you can start payrolling voluntarily before it’s required. If this is something you’d like to discuss, particularly if you’re already finding P11Ds a headache each year, we’re here to help.
Not sure how this affects your business or which benefits you provide? We can walk you through it. Contact us on 0800 999 1800 or send us an email on info@taxdriven.co.uk.
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