Employers will need to note the new government timeline for mandating the reporting and payment of Income Tax and Class 1A National Insurance on benefits in kind (BiKs). Originally planned for April 2026, this requirement will now take effect from April 2027. This extra year is intended to give you—as an employer, payroll professional, or tax agent—more time to get your systems and processes ready.

To support this transition, HMRC has released an updated technical note offering operational guidance to help you adapt in time for the change.

Employers can prepare early with Voluntary Payrolling
To help you get ahead, consider registering for voluntary payrolling starting in April 2026. Doing so allows you to familiarize yourself with real-time BiK reporting through payroll software. It also gives your organization a chance to test and refine payroll processes before it becomes mandatory.

⚠ Important: If you plan to start voluntary payrolling for the 2026–27 tax year, you must register by April 2026. You can only begin payrolling BiKs at the start of the tax year.

Key Reminders:

• Not all benefits can be included in the voluntary payrolling system yet. For example, living accommodation and beneficial loans (e.g. interest-free or low-interest) must still be reported on a P11D form for Income Tax.
• For all BiKs in 2026–27, you’ll still be required to report Class 1A National Insurance by submitting a P11D(b) form online.
• Any BiKs or expenses that you don’t payroll must still be reported via P11D forms.
• Be sure to communicate with your employees about the move from P11D-based reporting to real-time payroll reporting, so they understand the changes.