From 6 April 2027, mandatory payrolling of Benefits in Kind begins for company cars, car fuel, vans, van fuel and employer-provided medical benefits.
For accountants, bookkeepers and payroll professionals, this is more than a reporting change. Practices will need to think about payroll processes, the information they receive from clients, when that information is available and how the changes are explained to employers and employees.
FreshPay has created practical guidance, professional resources and a free webinar to help practices prepare.
The government is moving the reporting and taxation of Benefits in Kind away from a predominantly year-end process and towards real-time payroll reporting.
From 6 April 2027, phase 1 of mandatory payrolling will apply to:
Current position: HMRC's detailed guidance is still described as interim and further phase 1 guidance is expected before April 2027. Practices should prepare now while continuing to watch for updates.
When a Benefit in Kind is payrolled, its taxable value is taken into account through payroll so the employee pays the associated Income Tax during the tax year.
Under the mandatory system, the relevant benefits need to be reported at payroll dates throughout the year, rather than dealt with only through the traditional year-end process.
No, not completely. The move to real-time reporting changes the role of P11Ds for payrolled benefits, but P11D and P11D(b) processes still apply in some cases, including employment-related loans and accommodation that aren't payrolled. HMRC is also reviewing treatment for a small number of other scenarios.
Don't assume every year-end process disappears on 6 April 2027. You'll need to know which benefits move to real-time reporting and which obligations remain.
For practices running payroll across multiple employers, the practical challenge is likely to be as important as the technical one. There is still time to prepare, but this is not a change to leave until the end of the 2026/27 tax year.
Start with employers that provide company cars, car fuel, vans, van fuel or employer-provided medical benefits.
A benefit reported through payroll can't rely on information appearing only at year end. Understand what arrives now, who receives it, and whether it arrives early enough for payroll.
Where Benefits in Kind sit outside the regular payroll workflow today, decide who owns data collection, checking, payroll input, corrections and client communication.
Understand how your provider intends to support the April 2027 requirements.
Clients providing information annually may need to supply it more frequently. Setting expectations early makes it easier to build a workable process before April 2027.
Employees may see changes to tax codes and take-home pay. HMRC is encouraging early communication so they understand what's changing and why.
The free FreshPay Quick Guide gives you the essentials, while the Detailed Handbook goes further into the rules, implementation considerations and practical preparation.
A practical session for accountants, bookkeepers and payroll professionals covering the latest position, what phase 1 and phase 2 mean in practice, and what to do now.
If you want to work through the changes in your own time, FreshPay has created two professional resources for accountants, bookkeepers and payroll professionals.
A concise overview of what is changing, what it means for practices and the steps you can start taking now.
A comprehensive reference covering the rules, implementation considerations and practical preparation.
Both guides are free with a FreshPay Payroll Resources account.
Knowing the rules is one thing. Explaining them to clients is another.
FreshPay Client Resources gives practices ready-made PBIK materials they can use with their own clients and employees, presented through their own branded online payroll resource centre.
Phase 1 starts on 6 April 2027. It applies to company cars, car fuel, vans, van fuel and employer-provided medical benefits.
From 6 April 2027, mandatory payrolling applies to company cars, car fuel, vans, van fuel and employer-provided medical benefits.
No. Most remaining Benefits in Kind are planned to move into mandatory payrolling from April 2028. Employer-provided loans and living accommodation are excluded from the currently confirmed mandatory phases.
HMRC says employment-related loans and living accommodation will be available for voluntary payrolling from April 2027. The date for mandatory payrolling of these benefits will be confirmed later.
No, not completely. The role of P11Ds changes for benefits brought into mandatory real-time reporting, but P11D and P11D(b) processes will still be required in some circumstances, including where loans or accommodation are not payrolled.
Phase 1 Benefits in Kind will be reported through payroll software using the Full Payment Submission (FPS).
For the Benefits in Kind included in mandatory payrolling, the FPS will be used so both Income Tax and Class 1A National Insurance contributions can be reported in real time.
Yes. HMRC plans to reopen the voluntary registration service in November 2026 for non-mandatory Benefits in Kind for the 2027/28 tax year. The registration deadline is 5 April 2027.
Start by identifying affected clients, reviewing how Benefit in Kind information reaches payroll, agreeing responsibilities, checking payroll software plans and beginning client and employee communication well before April 2027.