Many businesses will be aware that making the payrolling of most benefits in kind (BiKs) and expenses mandatory has been put back 12 months and will now take effect from April 6th 2027. With assistance from The Chartered Institute of Payroll Professionals (CIPP), we’ve rounded up the key points in this month’s blog.
Reporting
The taxable value of BiKs and expenses will be reported via the full payment submission (FPS), allowing tax and Class 1A National Insurance contributions (NICs) to be reported in real time. HMRC’s Basic PAYE Tools will be updated in time for the change.
Calculations
The same process is currently used for those voluntarily payrolling benefits. Annual cash equivalent of benefit is divided by the number of pay periods per year and processed through payroll. Where the value isn’t known at start of the tax year, a reasonable estimate of the taxable value must be made. Where cash equivalent changes mid-tax year, the revised taxable amount must be calculated and payrolled for the remaining pay periods that tax year. An additional update process will be established for BiKs and expenses where the income tax and Class 1A NICs couldn’t be confirmed within the tax year. This could include fuel cards or accommodation. This will be used to record any under or overpayments of tax and details must be reported by July 6th following the tax year and any Class 1A NICs paid by July 22nd following the tax year.
Charges
No penalties for inaccuracies will be charged where mistakes are made in relation to mandatory payrolling in RTI returns for 2027-28, unless there’s evidence of non-compliance. Late filing and late payment penalties will still apply that year and so will statutory late payment interest. Further details on penalties and interest that will apply from 2028-29 onwards will be given when the draft guidance is published.
Registration
There is no need for employers to register to payroll BiKs from April 2027 unless they’re payrolling loans and accommodation benefits. HMRC will automatically remove benefits from employees’ tax codes ahead of mandatory payrolling. There is an option to voluntarily payroll most BiKs before it becomes mandatory, but registration is still required to do so before that point. The registration service to register for voluntarily payrolling loans and accommodation is expected to open from November 2026. This will need to be used
where there’s the intention to payroll loans and accommodation.
Any questions? Contact Three Counties Payroll’s expert team on 01905 622245.
Changes to payrolling of benefits delayed
