Phased introduction of mandatory payrolling of benefits in kind announced

Mandatory payrolling of the majority of benefits in kind (BIKs), except for employment-related loans and accommodation, was due to commence from April 2027. However, last week the Government announced a phased timeline for implementation. The timeline for delivery has now been published in a HMRC manual which also includes interim guidance and legislation. In light of concerns raised with the Government and based on stakeholder feedback, including from Chartered Accountants Ireland, the Government is now introducing mandatory payrolling on a phased basis. Chartered Accountants Ireland is represented on the HMRC Employer and Payroll stakeholder forum which discusses this and related issues.

Under the newly announced phased approach: 

• company car, van, fuel and medical BIKs will need to be payrolled from 6 April 2027, and
• all other benefits, except for employment related loans and accommodation, will be payrolled from 6 April 2028.  The payrolling of these will remain voluntary until further notice.  

Guidance is still awaited from HMRC on how Class 1A employer’s NIC will be calculated and reported in real time. HMRC has also advised that the interim guidance published last week will be further updated ahead of finalisation in the Autumn.