Mandatory payrolling of benefits in kind delayed until April 2027

The government has confirmed that the introduction of mandatory payrolling for Benefits in Kind (BiKs) will now take effect from 6th April 2027.

The changes were originally expected to be introduced from April 2026. HMRC has confirmed that employers and payroll providers will now have an additional year to prepare for the new reporting requirements.

Under the updated system, employers will be required to report and process taxable employee benefits through payroll software in real time. This includes the reporting and payment of Income Tax and Class 1A National Insurance contributions on applicable benefits.

Benefits in Kind commonly include:

• company cars
• private medical insurance
• employee loans
• accommodation-related benefits
• other taxable employee perks

The move to mandatory payrolling forms part of HMRC’s wider digital reporting and PAYE modernisation programme.

From 6th April 2027, employers will be expected to:

• process Benefits in Kind through payroll systems
• report taxable benefits in real time
• calculate and apply the relevant Income Tax deductions
• account for Class 1A National Insurance through payroll reporting processes

HMRC has stated that the delay is intended to provide additional preparation time for employers, software developers, payroll teams, and agents ahead of implementation.

Download our free guide to employer provided benefits in kind

Verallo has also released a new guide covering the upcoming changes to Benefits in Kind reporting, including what employers should prepare for before the 2027 deadline.

Download the full guide here: Verallo Benefits in Kind Guide