- HMRC have announced the mandatory payrolling of benefits in kind from 6 April 2027. The change was initially planned to apply from April 2026, but the start date was subsequently delayed. In November 2026, HMRC released additional details and guidance. It has been confirmed that:
- The intention is for payrolling of benefits to be mandatory for all employers and all benefits, with a few 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 22 July following the end of the tax year.
- Income Tax and Class 1A National Insurance 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). After that, P11Ds will only need to be filed for loans and accommodation benefits.
- 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 (except for loans and accommodation) will need to be reported via the payroll from 6 April 2027. Further stakeholder engagement from HMRC regarding policy decisions will take place throughout 2026. Legislation and further guidance are expected during Autumn 2026.
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