Payrolling 2027 – Class 1A to apply to both mandatory and voluntary items

Another piece of the mandatory payrolling changes is confirmed by the government:

From 6th April 2027 the position on applying real time Class 1A calculation in year is to be applied to all benefits in kind that have been payrolled.

April 2027 brings into play two different payrolled benefit treatments:

• Mandatory Payrolling (excepting globally mobile employees)- this covers
  • Company Cars
  • Company Car fuel
  • Company Vans
  • Company Van fuel
  • Private Medical
• Voluntary. Payrolling (the other benefits not mandated) that are not subject to Class 1 NICs:
  • Anything else with additional new options of voluntary Payrolling of:
    • Accommodation
    • Beneficial Loans

It has been confirmed by the minister acting for the government that where benefits in kind are voluntarily payrolled, employers must now also payroll any associated Class 1A NICs in real time from 6th April 2027.

This applies to benefits that are not included in the first phase of mandatory payrolling (non-mandated benefits) which are not already subject to Class 1 NICs.

Employers cannot choose to payroll the Income Tax and report the associated Class 1A NICs separately at the end of the tax year. 

Couldn’t we already apply real time Class 1A to benefits payrolled!

Simply NO.

Before April 2027, HMRC only permit real time Class 1A on termination payments and sporting testimonials which have their own Real Time Information (RTI) Full Payment Submission (FPS) reporting fields. These must not be used for benefit Class 1A.

Benefit Class 1A is introduced from 6th April 2027 with its own set of reporting fields, and also with some confusing adjustment value fields introduced at the same time.

What does this mean for employers?

So from April 2027, a real time calculation on the taxable value of benefits is to be performed within the payroll process, at time of publishing, the indicative Class 1A contribution rate is 15%.

Although no change is currently anticipated at the point of writing, this rate can be changed as part of the Autumn budget process and associated announcements.

This payment will be required to be paid across to HMRC along with other ya. And National Insurance amounts by the 22nd May 2027 of the month following the relevant April 2027 tax month and so on for each following tax month for payment by the relevant 22nd day.

Seeing double!

The unusual aspect initially of Class 1A for 2027, is that the prior years Class 1A liability for the whole 2026/2027 tax year, continues to have a 22nd July 2027 payment deadline – it is possible that 2 months of the new years Class 1A is required to have been paid by the employer prior to the entire previous tax year amount owed.

Employers will need to plan their cash flow and payments to HMRC for this initial transition period.

Benefits that continue to be reported on forms P11D (not payrolled), will continue to be required to be reported on form P11D with payment by the 22nd July of the following year to the relevant tax year end.

The Payrolling jigsaw is coming together

Finally all of the change pieces for Payrolling are starting to come together.

Shortly we will have the updated Data Items guide for RTI, and HMRC will soon publish more detailed guidance on the Payrolling requirements that apply from April 2027. They are subtlety different to the former voluntary arrangements which have existed since April 2016 following the prior Office for Tax Simplification recommendation.

Some may question whether there is any simplification consideration in these decisions.

PAYadvice.UK 17/9/2026