Updated 29.04.25
The mandatory payrolling of income tax and Class 1A NIC on benefits, originally planned for April 2026, will now start on 6 April 2027. The delay follows concerns raised by industry experts about the readiness of software providers –
Payrolling delay leads spring tax update | HSJ Accountants
Changes to Taxation on Benefits in Kind (BiKs) and P11D in 2026
Mandatory Payrolling of BiKs
Starting from April 2026, employers will be required to report and pay Income Tax and Class 1A National Insurance Contributions (NICs) on most BiKs in real-time through payroll software. This means that the value of benefits provided to employees will be reported directly through the payroll, rather than submitting a separate P11D form at the end of the tax year.
Benefits Included 
Most BiKs will need to be reported in this way, including items such as company cars, medical insurance, and other non-cash benefits. However, employer-provided living accommodation and beneficial loans will be mandated to be reported later, although employers can voluntarily payroll these benefits from April 2026.
Benefits Exempt from Payrolling
Employer-related loans and accommodation are currently exempt from mandatory payrolling but can be reported voluntarily.
Benefits for Employers
- Simplification: The new system aims to simplify the tax reporting process and reduce the administrative burden on employers.
- Transparency: Employees will be taxed on BiKs as they are received, making it clearer what they are paying tax on.
- Real-Time Reporting: This change will ensure that employees are taxed correctly and promptly.
Steps for Employers to Prepare
- Employee Communication: Inform employees about the changes and how it will affect their pay.
- Data Management: Streamline data management processes for accurate and timely reporting.
If you manage your payroll in-house, you should also consider:
- Review Software: Ensure your payroll software can handle real-time reporting of BiKs.
- Training: Provide training for your team to understand the new requirements.
Registration with HMRC
Employers will need to register with HMRC before the start of the next tax year with details of the benefits they wish to payroll.
We’re here to help you
If you have any questions or would like to discuss how these changes directly affect you, please contact us.
Please note:
HMRC reserve the right to change or delay the 6 April 2026 implementation of payrolling benefit.