HMRC have indicated that benefits in kind must be payrolled from April 2027. This is being referred to as Mandatory Payrolling Benefits in Kind (MPBiKs).
They had already issued two sets of draft documents with more information issued on Monday 15th June 2026 proposing a new phased approach for April 2027 and a further phase for April 2028.
The payroll and software industry have responded to HMRC that the original two draft requirements for FPS reporting was too complex a data requirement. Users would struggle with the amount of granular data required.
Now we have the confirmed approach, employers need to start readying their April 2027 (MPBiKs) Payrolling project, and those who have already voluntarily payrolled will need to audit and review as the process of application is different.
It’s time to start. Firstly identify if you have benefits and who has relevant benefit data.
With Payrolling the polarity of benefit handling changes. No longer is the employer looking back at what happened, but predicted a future benefit across the current tax year and applying in instalments for tax and the introduction of real time Class 1A.
So what should you do at the stage:
- What benefits do you have? what type are they (Medical, Car, Van, other)?
- Are they subject to reporting on the old form P11D?
- Are they taxable?
- Are they subject to Class 1A national insurance or even Class 1 (such non-cash vouchers)?
- Is salary sacrifice or other Optional Remuneration Arrangement being operated for that benefit (such as salary sacrifice EV car scheme etc.)?
- Along with mandatory items, will the business payroll the other items voluntarily?
This list if going to be an essential first step in identifying the potential payroll configuration settings for April 2027.
Be prepared for future stages and preparation activity in getting ready for Payrolling April 2027 and April 2028.
As more information is released in readiness, PAYadvice.UK will add resources and articles to support U.K. employers who provide benefits in kind to their employers and how to comply with this new obligation.
And remember, if you are already Payrolling, great, but the new operation and reporting regime will be different and so you still need a project for Payrolling 2027.
PAYadvice.UK 15/6/2026 updated 16/6/2026