22/10/2026
The move to mandatory payrolling of benefits in kind from April 2027 is a significant operational shift for employers, payroll teams and software providers.
From that date, Income Tax and Class 1A NICs on company cars, fuel, vans and private medical benefits will need to be reported and collected in real time through payroll, rather than via the traditional year-end P11D process.
Most remaining benefits follow in 2028, with loans and accommodation staying outside the mandatory regime for now.
While the policy aim is greater accuracy and transparency, the practical challenges for industry are real:
✅ Redesigning data flows between benefits providers, HR and payroll so values are available in time for each pay run
✅ Managing estimation, mid-year changes and corrections inside live payroll
✅ Preparing employees for the move from arrears/coding to in-year deduction (and the temporary overlap many will see)
✅ Handling the one-off Class 1A cash-flow timing in 2027
✅ Running dual processes for a period where some benefits are payrolled and others remain on P11D
I’m currently feeding into this work through the CBI’s Employment Taxes Working Group, reviewing the evolving guidance and helping surface the operational and systems issues that employers and payroll software providers will face.
The more practical the final design and communications, the smoother the transition for everyone.
If you’re working through readiness planning or software changes for 2027, happy to compare notes and provide my guidance templates and letters that can be used that I created for my platform back in June but updated following further Hmrc changes but as an investment to the payroll industry I’m happy to give for free! 🆓 well perhaps in return for a bit of feedback on durasuite!
As clients are the best teachers for me right now - I’ll learn from you what works and solves your pain!