Payrolling benefits in kind: HMRC's registration service is now open

By Becky Cooper, founder of Buffalo Payroll (CIPP Foundation Degree in Payroll Management). Published 5 November 2026.

On 5 November 2026, HMRC reopened its online service for voluntarily payrolling benefits and expenses for registrations and cancellations. We covered the timetable in October. This post covers what's new now that the service is open, and how payrolling affects pay runs and payslips.

What's changed today

• The service is open. Employers can register to payroll non-mandatory benefits for 2027/28, or cancel an existing registration.
• Loans and accommodation can be payrolled. According to GOV.UK, living accommodation and loans can now be payrolled, which wasn't possible before.
• The deadline is 5 April 2027. Registration applies from the start of the next tax year. You can't change how you report benefits for 2026/27.

From 6 April 2027, company cars, car fuel, vans, van fuel and medical benefits must be payrolled anyway, without registering. Most other benefits follow from April 2028, according to HMRC's policy paper. So registration matters for the other benefits you provide, such as gym membership, non-cash vouchers, loans or accommodation.

Class 1A goes through payroll too

From 6 April 2027, if you voluntarily payroll a benefit, the Class 1A National Insurance on it must also be reported and paid through payroll in real time. You can't payroll the tax and leave Class 1A for a year-end P11D(b), according to HMRC's October 2026 Employer Bulletin. Your monthly PAYE payments go up, and Class 1A on those benefits is no longer one payment in July.

How it shows on payslips

You add the benefit's cash equivalent to taxable pay, spread across the year's paydays, and tax it through PAYE. HMRC's example: a company car with a £5,200 cash equivalent adds £433.33 to taxable pay each month, or £100 a week. The cash equivalent is worked out the same way as for a P11D.

There's an overriding limit: you can't deduct more than 50% of an employee's cash pay in tax. If a benefit would push tax over that, the uncollected tax is carried forward to later paydays. Anything still owed after the last FPS of the year is collected by HMRC through an end-of-year calculation.

Tax codes and telling employees

HMRC adjusts tax codes for employees whose benefits are payrolled, so the benefit isn't taxed twice. Before 6 April 2027, it will remove the estimated benefit adjustment from codes for employers who choose to payroll. It won't remove underpayments from earlier years, which are still collected through the tax code.

You must tell employees in writing, by payslip, email or letter, that you're payrolling their benefits. For the first year, explain that their tax code will change and that the benefit will be taxed through each payslip. A written notice is also due by 1 June after each tax year.

Should you register?

Registering usually makes sense if you already payroll company cars or medical cover from April, as most of the process will already be set up. It also lets you stop most P11Ds a year early, and employees pay tax on their benefits as they go. It's less helpful if your payroll software can't yet handle the benefits you provide, or if the employees involved are on low pay and the 50% limit would apply often.

1. List every benefit you currently report on a P11D.
2. Separate the mandatory ones (cars, vans, fuel, medical) from the rest.
3. Check your payroll software can handle the rest, including Class 1A.
4. Register online by 5 April 2027, or withdraw an existing registration if you don't want to carry on.
5. Write to the employees affected.

Our guide to payrolling benefits in kind goes through the whole change.

This article is general information based on official sources at the date of publishing, not legal or tax advice. Rules can change, so check the linked guidance or talk to us about your payroll.