Mandatory payrolling of benefits in kind delayed until April 2027
HMRC has announced a year delay to mandatory payrolling of benefits in kind (PBIK). Originally scheduled for coming into force from April 2026, PBIK will now hit businesses from April 2027.
This delay will likely be welcomed by many, providing valuable extra time to prepare for the changes. However, employers may still choose to payroll benefits in kind voluntarily before the new deadline. Similarly, they may have also chosen to voluntarily register already.
Already registered?
If you have previously registered for PBIK for 2025/26, you are well-prepared ahead of mandatory introduction. As you have already commenced voluntary payrolling, you will see minimal change when this becomes mandatory in April 2027.
Advantages of early adoption
While businesses are not obliged to act immediately, early adoption of payrolling benefits could prove beneficial. If you have not voluntarily payrolled, integrating PBIK into payroll processes ahead of the mandatory deadline can have the following advantages:
- Employers no longer need to submit P11D and P46(car) forms to HMRC.
- After implementation, you should receive fewer HR queries from employees due to simpler tax codes.
- Tax deductions in monthly payroll will be more accurate.
- Tax codes for individuals should change less frequently.
- Fewer forms for employers to complete at year-end.
Additionally, as more income tax is administrated through PAYE, the potential for penalties due to compliance errors decreases. Early registration and adoption can be beneficial in reducing the risk of errors.
Where employers provide benefits across a steady workforce, for example, provision of company cars and private medical insurance to their employees, we encourage them to consider whether registration for early adoption from April 2026 may be suitable for them.
Further guidance from HMRC is expected in the coming months to assist businesses with preparation and implementation. We will also provide any updates as and when information is released.
We are here to help
Employers considering early adoption should review their payroll systems and communicate clearly with employees about any changes to the way their benefits are processed.
If you have any questions on payrolling benefits in kind and how your business can prepare for the introduction, please get in touch with employer solutions team via the form below or contact your usual Azets advisor.
