- In January 2024, HMRC announced the mandatory payrolling of all benefits in kind. The start date was later delayed to April 2027 and the timetable was updated again in June 2026. The introduction of mandatory payrolling will now be a two-phased approach:
- Phase 1: from 6 April 2027, payrolling of benefits will be mandatory for medical-related benefits and car-related benefits (including van and fuel benefit). P11Ds will still be required for other benefits (unless voluntarily payrolled).
- Phase 2: Starting with the 2028-29 tax year, payrolling all benefits will be mandatory, except for loans and accommodation. P11Ds will then only be required for loans and accommodation benefits (subject to future HMRC guidance).
- 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: Phased approach starting in April 2027 (see above). Further stakeholder engagement from HMRC regarding policy decisions will take place throughout 2026. Legislation, further guidance and software specifications are expected during Autumn 2026.
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