HMRC pushes back deadline for mandatory payrolling of benefits
Organisations won’t be required to payroll benefits-in-kind and expenses until April 2027. Here’s what the change means and why it pays to be prepared.
HM Revenue and Customs (HMRC) has pushed back the introduction of mandatory payrolling of benefits from April 2026, to April 2027. That means organisations have a whole extra year to prepare.
What does payrolling benefits mean?
Payrolling benefits is when you add the value of your employee benefits directly to each employee’s taxable pay. It replaces the need to report benefits via P11D forms.
The value of each employee’s benefits gets added to their salary. Depending on the benefits, this will usually be taxable, but the employee won’t be charged National Insurance on their value. Currently, you will still need to submit a P11D(b) to declare NIC on any benefits you provide to your employees.
The advantage of payrolling benefits is that the PAYE system will automatically calculate how much tax each of your employees owes, so they’re always up to date on their tax liabilities.
Why has the deadline changed?
HMRC originally announced April 2026 as the start date for payrolling benefits, but has since pushed it back to April 2027.
HMRC says the deadline has been delayed to give organisations time to prepare.
Even though organisations have an extra year to prepare, you should start thinking about how you’ll manage the change.
|
💡 Mintago customers can request independent financial advice for help understanding how to payroll benefits |
How to prepare:
The main benefit of preparing early is that you’ll have the time to evaluate your internal processes.
There are a few steps you can take to make sure the change goes smoothly for your organisation…
- Identify all the benefits you currently provide
- Train your staff, if necessary
- Watch out for further updates from HMRC
- Follow us on LinkedIn or Facebook for future updates
You won’t be able to prepare for everything. Payroll software is unlikely to be updated until nearer 2027, for example. But making sure you understand your responsibilities and how your organisation will be affected will help you manage the change when it arrives.