- HMRC have announced the mandatory payrolling of all benefits in kind. The change was initially planned to apply from April 2026, but the start date was subsequently delayed to 6 April 2027. So far, HMRC have released limited detail on how this change will work exactly, with many detailed policy design questions remaining open. To date, is has been confirmed that:
- The intention is for mandatory payrolling of benefits to be mandatory for all employers and all benefits, with limited exceptions.
- It will become possible to voluntarily payroll loans and living accommodation if employers register to do so, but these two benefits will be excluded from mandatory payrolling for the time being. A P11D and P11D(b) process will be maintained for these two benefit categories.
- Employers will be expected to payroll an amount based on a reasonable estimate where full benefit values are not available in-year. HMRC will implement a year-end process to capture corrections after the year end, up to 6 July following the end of the tax year.
- Income Tax and Class 1A will need to be reported and remitted by employers through Real Time Information reporting, removing the need to file Forms P11D and P11D(b).
- Forms P11Ds/P11D(b)s will still need to be produced for tax years up to and including 2026/27 (filing deadline 6 July 2027).
- HMRC are still considering whether to implement any adjustment for globally mobile employees who are part of modified PAYE arrangements.
- Providing benefits in kind is an integral part of most employers’ reward strategy which impacts multiple stakeholders, including HR/reward, benefit providers/vendors, tax, payroll, software providers, and of course employees. The change to payrolling all benefits for all employees will require a major transformation project for most organisations, involving buy-in and co-operation from all stakeholders involved.
- Timing: HMRC have announced that all benefits in kind will need to be reported via the payroll from 6 April 2027. Further updates from HMRC regarding policy decisions, including draft legislation and guidance are expected during late Summer/Autumn 2025.
Resources (click to open)
- Technical note: Mandating the reporting of benefits in kind and expenses through payroll software – an update (HMRC policy paper, 28 April 2025)
- Mandatory payrolling all benefits in kind – the end of P11Ds (part 3) (Deloitte Dbriefs Webcast, 10 December 2024)
- Mandatory payrolling all benefits in kind – the end of P11Ds (part 2) (Deloitte Dbriefs Webcast, 30 July 2024)
- Mandatory Payrolling All Benefits In Kind – The End Of P11Ds (part 1) (Deloitte Dbriefs Webcast, 14 March 2024)
- Confirming plans to mandate the reporting of benefits in kind via payroll software from April 2026 (HMRC policy paper, 30 October 2024)
- Mandating the payrolling of benefits in kind (HMRC policy paper, 16 January 2024)
