The timeline
According to HMRC's guidance on the phased introduction, mandatory real-time reporting of benefits in kind (BiKs) is being introduced in two phases:
| Date | What happens |
|---|---|
| November 2026 | HMRC registration service opens for voluntarily payrolling non-mandated benefits, such as loans and accommodation |
| 5 April 2027 | Deadline to register for voluntary payrolling for 2027/28 |
| 6 April 2027 (phase 1) | Company cars, car fuel, vans, van fuel and employer-provided medical benefits must be payrolled |
| 6 April 2028 (phase 2) | Most other benefits must be payrolled. Loans and accommodation stay voluntary for now. |
How payrolling works
Instead of reporting benefits on a P11D after the tax year, you work out the annual cash equivalent of each benefit, divide it by the number of pay periods and add it to the employee's taxable pay each period. Income Tax and Class 1A National Insurance are then reported on the Full Payment Submission in real time. HMRC will remove mandated benefits from tax codes automatically before April 2027.
Get-ready checklist
- List every benefit you provide that is currently reported on a P11D
- Identify which are in phase 1 (cars, fuel, vans, medical)
- Check your payroll provider and software can payroll benefits in real time
- Decide whether to voluntarily payroll loans or accommodation and register by 5 April 2027
- Tell employees their take-home pay will change, because they'll pay tax on benefits in the year they receive them
- Set up a process for mid-year changes, such as a new company car
HMRC's getting ready guidance stresses communicating with employees early, because many don't realise they currently pay tax on benefits through their tax code.
Penalties in the first year
HMRC has said it won't charge penalties for inaccuracies related to mandatory payrolling in 2027/28 unless there's evidence of deliberate non-compliance. Normal late filing and late payment penalties still apply.
Need help? Our P11D and benefits in kind service covers both P11Ds and payrolling.