Mandatory Payrolling of Benefits in Kind: Your Need to Know for April 2026
Mandatory Payrolling of Benefits in Kind: Your Need to Know for April 2026 The payroll landscape is set to undergo a change from April 2026. This marks a shift in how employers report and process benefits, aiming to simplify tax administration and improve efficiency.
What is Payrolling of Benefits in Kind?
Currently, employers have the option to payroll benefits voluntarily, allowing the tax due to be collected via PAYE in real-time rather than through an employee’s tax code adjustment at year-end. From April 2026, this will no longer be optional—all benefits provided to employees will need to be payrolled.
Key Changes and What Employers Should Do
- Mandatory Registration: Employers must register for payrolling benefits with HMRC before 6 April 2026. Those already using voluntary payrolling should ensure they are compliant with the new rules.
- End of P11D Reporting: Once payrolling is in place, employers will no longer be required to submit P11D forms for payrolled benefits, reducing administrative burdens.
- Real-Time Taxation: Employees will pay tax on their benefits through payroll each pay period, ensuring more accurate deductions and fewer year-end adjustments.
- Payroll System Adjustments: Businesses must ensure their payroll software is compatible with the new requirements and can handle benefit taxation seamlessly.
Steps to Prepare
- Review Current Benefits Processes – Identify which benefits your business provides and how they are currently taxed.
- Upgrade Payroll Software – Ensure your payroll system is capable of handling BiKs in real-time.
- Register with HMRC – Employers who wish to payroll benefits early should register before 6 April 2025.
- Communicate with Employees – Inform employees about how this change will impact their payslips and tax deductions.
The Benefits of Payrolling BiKs
By moving to mandatory payrolling, the government aims to create a smoother, more transparent taxation process. Employers will benefit from reduced administrative workloads, while employees will experience fewer unexpected tax adjustments.
At Augustus Payroll Services, we are here to help businesses navigate this transition smoothly. If you need assistance in preparing your payroll systems or understanding these changes, get in touch with our expert team today.
If you want more information about Mandatory Payrolling of Benefits in Kind – Please get in touch!
Mandatory Payrolling of Benefits in Kind: What Employers Need to Know for April 2026 – Source: https://www.gov.uk/government/publications/reporting-and-paying-income-tax-and-class-1a-nics-on-benefits-in-kind-in-real-time#:~:text=The%20technical%20note%20confirms%20that,employment%20related%20loans%20and%20accommodation.
