Mandatory payrolling of employer-provided benefits in kind was due to be introduced from April 2027, but HMRC has now confirmed that this will be phased in for only certain benefits from April 2027, with others delayed to April 2028 or later. With payrolling, the taxable value of benefits in kind and expenses has to be reported via the full payment submission (FPS).
For the first phase, only motoring expenses and medical benefits will be covered. 94 other categories have been removed from the initial rollout, with HMRC saying that the delay “will support a smoother transition for businesses”.
The second phase will see the mandatory payrolling of most other benefits from 6 April 2028, but this will remain voluntary for loans and accommodation benefits. Final guidance on the first phase is expected alongside the Budget announcements in the autumn.
The need to deal with two separate systems rather than one is likely to place extra pressure on employers, but HMRC has confirmed that anyone who had already planned to payroll all their benefits can still do voluntarily. DSG’s payroll team is here to help if you need any support with the transition or any other aspects of your payroll management – please reach out and we would be happy to discuss how we can assist you.
