Background
Only last month in Muras Matters we reported that the mandatory payrolling of benefits in kind (‘BIK’) would start from 6 April 2027 for those business who had not already voluntarily adopted to payroll benefits, after a number of delays to the original start date.
However, HM Revenue & Customs have now announced a further change, and there is now set to be a phased introduction to the mandatory payrolling of BIK from 6 April 2027. Previously, the intention was that all benefits other than employment-related loans and accommodation would be subject to mandatory payrolling from April 2027.
Detail
Mandatory real-time reporting of income tax and class 1A National Insurance for specified BIKs and taxable expenses will now be phased in from 6 April 2027.
Under the phased approach:
- Company cars, van, fuel and medical benefits will be payrolled from 6 April 2027; and
- All other benefits, excluding loans and accommodation, will be payrolled from 6 April 2028.
The payrolling of loans and accommodation will remain voluntary until further notice as they can be difficult to value within the tax year.
There had previously been concern that the full implementation of mandatory payrolling for BIKs intended for April 2027 did not provide software developers, employers and agents enough time to prepare. An ICAEW statement from the tax faculty provided the view “We believe this phased approach will help employers and businesses ease into mandatory payrolling of benefits from 6 April 2027, enabling commonly-provided benefits with known tax values to be payrolled in the first instance, while allowing employers time to adjust their data collation and process flows for other benefits they might offer”.
HMRC has stated that it will provide updated guidance in July 2026 and that it will continue to engage with stakeholders and industry representatives over the summer before publishing final guidance regarding phase 1. We will of course provide updated news on the mandatory payrolling of BIKs when available.
If you would like further information on any of the points raised above, or more information on mandatory payrolling of BIK or more generally in relation to employment related BIKs please contact our Tax Director, Jenny Marks.
To see our other news items please visit our Muras Baker Jones – Blog.