The announcement of mandatory payrolling for Benefits In Kind was originally expected to start in April 2027, but following industry pressure, it will now be introduced in two phases.
Phase 1 will continue to be rolled out from 6 April 2027, with Phase 2 starting a year later on 6 April 2028. The move to mandatory payrolling will replace the current P11D process for most benefits and move it to real-time processing through a company’s payroll system.
Employers providing employee benefits must provide taxable values through payroll in real-time and apply Income Tax and Class 1A NICs through payroll rather than submitting yearly P11D forms.
Phase 1 of mandatory payrolling from April 2027 will include: company cars, car fuel, vans, van fuel and employer-provided medical benefits.
Phase 2 from April 2028 will include most other Benefits In Kind except beneficial loans and living accommodation. These will continue to be voluntary.
Further guidance is expected by July 2026.
