The deadline to mandate Payrolling Benefits in Kind has been delayed until April 2027
Voluntary payrolling will continue in the years 2025/2026 & 2026/2027 - register before the 5th April 2025, or 2026
Loans and accommodation will be voluntary from April 2027
Draft legislation, draft guidance and technical information will be provided from Autumn 2025 onwards
From April 2027, the reporting process for BiKs and expenses will be through the Full Payment Submission (FPS).
The FPS will be used to report the taxable value of BiKs and expenses so that both Income Tax and Class 1A NICs can be reported in real-time
The number of fields for reporting BiKs and taxable employment expenses in RTI (via an FPS) will be increased to align with what is currently reported in the P11D and P11D(b) forms
Under the present voluntary payrolling arrangements, limited data is collected on BiKs. To support the introduction of mandatory payrolling, HMRC will need visibility of the BiKs in the FPS to ensure that the correct tax is being reported and paid.
- Benefit Value - The general rule will be that employers will need to divide the annual cash equivalent of the BIKs by the number of relevant pay periods for each employee. Customers will be expected to use a reasonable estimate. If a Benefit in Kind (BiK) is identified after the tax year has begun, it can be reported in the remaining pay periods without amending earlier submissions, as long as it is included within that tax year
- Penalties and Interest - For later tax years from 2028 to 2029 onwards, penalties and interest will apply in a similar way as they do now for voluntarily payrolled BiKs and expenses.
- First Year - customers can ask HMRC to spread the underpayment over more than one tax year
- Underpayments - will be collected by HMRC after the end of the tax year via the existing end-of-year reconciliation (P800) process, simple assessment or self assessment :
- Fuel cards for cars - Employees who use their own car and pay for fuel using a fuel card will be required to have the taxable value reported in real-time. If there is an under or over payment of tax due to monthly statements not being received by the employer, this can be corrected using the BiKs update process
- Low income / High benefit values
- 50% regulatory limit
- Benefits after leaving
The full announcement and commentary on specifics can be found here:
Technical note: Mandating the reporting of benefits in kind and expenses through payroll software – an update