By Michael Court, Tax Consultant
HMRC has confirmed that the move to mandatory payrolling of taxable benefits-in-kind will now be phased in from April 2027, rather than introduced for most benefits all at once.
From 6 April 2027, employers will need to payroll certain benefits, including company cars, car fuel, vans, van fuel and employer-provided medical benefits. Most other benefits are expected to follow from April 2028, although loans and accommodation will remain voluntary for the time being.
For employers, this is a welcome breathing space. However, it should not be seen as a reason to delay preparations. Payrolling benefits means tax and Class 1A National Insurance will be reported through payroll in real time, rather than dealt with after the tax year through the traditional P11D process.
This will require accurate and timely information between HR, payroll and finance teams to:
- Review the benefits currently provided
- Check whether payroll software can cope with the new requirements
- Ensure internal processes are robust enough to capture changes as they happen
Although the phased introduction gives businesses more time, the practical impact could still be significant. Getting ready early should reduce the risk of errors, unexpected tax code issues for employees, and additional pressure at payroll deadlines.
Our specialist tax team can help employers review their current benefit reporting processes and prepare for the changes ahead.