Payrolling of benefits in kind will become mandatory from April 2027 after the UK government set the deadline back a year – but should employers go ahead and do it from April 2026 anyway?

Organisations can already voluntarily payroll most benefits in kind. Rather than wait until April 2027, implementation could be achieved from this April and here we look at the advantages and how to go about it.

The advantages of payrolling benefits in kind

Payrolling benefits in kind can deliver practical advantages for employers and employees by strengthening compliance oversight, reducing admin and improving transparency. For example:

• Risk and compliance management: Where benefits are processed via the payroll each month, employers have clearer ongoing visibility rather than having to wait until the end of the tax year to get the picture. This reassures them on the accuracy of benefit in kind reporting.
• Reduction in year-end admin: Collecting benefit information throughout the year means there’s less work to do at the end of the tax year. This is reinforced by the fact that forms P11D are not required for payrolled benefits (see below).
• Simplification of employee tax position: Payrolling benefits makes the tax impact easier for employees to understand, with questions handled in real time rather than after the tax year ends.

Steps employers must take

If you choose to begin voluntarily payrolling benefits in kind from April 2026 and make the most of this opportunity, there are a number of steps you must take:

• Register with HMRC: Employers must register their intention to payroll benefits in kind with HMRC via their online gateway account before the start of the new tax year i.e. by the 5 April 2026. Note that where employers choose to wait until the mandatory deadline, this will not be necessary.
• Communicate with employees: Employers must inform their employees of the changes they may see on their payslips and/or tax code. Due to the sensitive nature of employee pay changes, this should be done as far in advance as possible.
• Discuss with benefit providers: Employers must ensure that benefit providers are able to provide complete and accurate information updates as quickly as possible where there are any changes. This may include leavers, joiners or any other plan changes, such as annual renewals.
• Calculate monthly benefit in kind values: Where introducing the practice voluntarily, employers will need to calculate benefit in kind values on a monthly basis and ensure that these are processed via the payroll.

As well as the required steps outlined above, there are a number of other considerations and planning suggestions for employers. We have outlined some of these in our previous article regarding the deadline extension.

Year-end benefit reporting requirements

For completeness, please note that forms P11D and P11D(b) will still be required for the current 2025/26 tax year.

Where benefits are voluntarily payrolled from April 2026, a form P11D(b) will still be required for the 2026/27 tax year. Although no forms P11D are required to report payrolled benefits, employers must provide employees with a statement of benefits that have been payrolled following the end of each tax year.

From April 2027, Class 1A National Insurance Contributions will need to be processed through the payroll monthly, removing the requirement for form P11D(b) to be submitted to HMRC following the end of the tax year for 2027/28 and all subsequent years.

What employers should do next

As employers must register their intention to payroll benefits in kind with HMRC prior to the start of the new tax year (as above), their final chance for employers to take advantage this opportunity will be for the 2026/27 tax year, starting in April 2026.

Employers wishing to take advantage of this opportunity should begin implementing the steps outlined above without delay.

For more information on payrolling benefits in kind or preparing for the April 2027 changes, please get in touch with Aimee Pain or your usual RSM contact.

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