HMRC are planning to have a phased rollout switching Benefit in Kind reporting from P11D to Payrolled Benefits.
The below timelines are the current forecasted dates set by HMRC, but may be subject to change.
Phased Rollout: Mandatory payrolling is introduced in stages:
- 6 April 2027 (Phase 1): Mandatory for company cars, car fuel, vans, van fuel, and employer-provided medical benefits.
- 6 April 2028 (Phase 2): Mandatory rollout for other remaining taxable benefits.
- Exceptions: Employment-related loans and living accommodation remain under voluntary/P11D rules for now.
- Real-Time Tax: The cash equivalent value of the benefit is divided across pay periods and added to taxable pay each month, collecting income tax and Class 1A National Insurance contributions (NICs) in real time via Real Time Information (RTI).
- End of P11D Forms: For benefits covered by the mandate, forms P11D and P11D(b) will phase out accordingly, though P11D forms may still be required during hybrid or transition years for Phase 2 items.
Note: It is only possible to payroll benefits in the 2026/27 tax year, if the employer was registered with HMRC to payroll benefits before the start of the new tax year (ie by 5th April 2026). If the employer was not registered to payroll benefits for the 2026/27 tax year, you must continue to use P11D as the tax accounting method until the mandatory changes come into effect.
BrightPay is fully programmed to allow users to process BIK via payrolled benefits. Enter the benefit in kind into the employee's record and under the tax accounting method field, choose 'PAYE payrolling benefits'. The amount of the periodic benefit will then appear on the employee's payslip and will be added to their taxable gross. Finalise the payslips and process in the usual way, the payrolled benefits will be displayed on the FPS and reported to HMRC.
You can read official guidance on GOV.UK Payrolling Benefits.
Q. Is there a letter template for the upcoming payrolling benefits in kind changes?
A. No. BrightPay doesn’t have a letter template for the upcoming changes to payrolling benefits in kind, so you’ll need to tell your employees about the change outside the software.
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