Mandatory payrolling now to be phased in

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. 

If you need any help with the mandatory payrolling changes, please give us a call. We would be happy to help you.