HMRC has announced that payrolling benefits and paying class 1A NIC on BIK via payroll will be mandatory from April 2026.

The aim is to reduce administrative burdens by simplifying and digitising reporting and paying tax on all employment benefits, removing the need for four million P11D returns and forms P11D(b).

With various potential complexities that may arise from this change, draft legislation and guidance will be required to understand fully the impact in various practical scenarios. Draft legislation is expected to be published later this year, following which we hope to be able to provide a further update.