Get ready for mandatory payrolling of benefits in kind (BiKs)
For employers who offer any of the mandatory benefits:
- Cars and Fuel
- Medical benefits
- Vans and Fuel
It is important that employers start planning on both the payroll implementation aspects and how they will obtain and apply the required benefit data from their benefit providers.
Employers will not need to register in order to payroll mandatory BiKs (company cars, car fuel, vans, van fuel and private medical benefits) from April 2027.
Voluntary Payrolling
Employers are wise to also identify all other benefits and consider if they will be handle through the voluntary Payrolling route from April 2027.
Some employers have introduced Payrolling on a voluntary basis since the option was introduced back in April 2016. If they are continuing to be payrolled, these cases will already be registered with HM Revenue and Customs (HMRC).
For those who must now comply with mandation items but have others which have not been registered before, the employer may take the view that they will not wait until April 2028 when mandation extends, but go early.
The list of voluntary benefits that may be payroll extends to loans and accommodation.
Registration (opens November 2026)
Employers wishing to voluntarily payroll non-mandatory BiKs (including employment related loans and accommodation) will need to register to do so.
The service to register to payroll non-mandatory BiKs from April 2027 will go live in November 2026.
HMRC encourages employers who want to voluntarily register to payroll non-mandatory BiKs to do so as soon as the service goes live in November 2026.
The deadline for registering to voluntarily payroll non-mandatory BiKs will be 5th April 2027.
What does registration do?
HMRC automatically removes the BiKs value from the assessment of the employees’ tax codes in readiness for the start of mandatory payrolling on 6th April 2027.
As part of this work HMRC retain the current process of collecting under payments from a previous year.
This means as part of the coding exercise HMRC’s systems will not remove underpayments of tax from a previous tax year from tax codes (for example, additional tax due on a benefit in kind (BiK) or expense).
Alternatively, if an employee wants to pay the underpayment they can do so. In some circumstances they may be able to use the personal tax account to do this. There is also an option to send a cheque or postal order to HMRC, as long as the employee has received a P800 which confirms the underpayment.
Does Payrolling cause double tax punch?
The simple answer is no as when the employer registers in good time, any assumption benefit amounts are removed from the employees tax codes.
The cause of double tax is the P11D and not Payrolling. By the time the former P11D data was applied from July each year, but reporting the prior tax years benefit, HMRC would take action to recover both the prior tax years benefit charge whilst also correcting the current tax years benefits on a predictive basis.
Although there may be some legacy P11D outstanding amounts, Payrolling does not cause this and for the future will eliminate the double tax hit.
PAYadvice.UK 9/8/2026