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HM Revenue & Customs (HMRC) has published updated guidance and draft legislation confirming how the mandatory payrolling of Benefits in Kind (BiKs) will be introduced from April 2027.
The changes follow the Government's announcement at Autumn Budget 2024 that most taxable benefits and expenses would move to real-time reporting through payroll. HMRC has now confirmed that implementation will be phased, rather than introduced in a single step.
From 6 April 2027, mandatory payrolling will apply to company cars, car fuel, vans, van fuel and employer-provided medical benefits. The second phase, commencing from 6 April 2028, will extend mandatory payrolling to most other Benefits in Kind. Loans and accommodation benefits will remain outside the mandatory regime and continue on a voluntary basis.
The changes are particularly relevant for Members who provide customers with company cars, vans or salary sacrifice vehicles. Employers that are not already reporting these benefits through payroll will need to ensure appropriate systems and processes are in place ahead of April 2027. While many larger organisations already payroll vehicle benefits, the new requirements may represent a more significant change for smaller employers.
HMRC has indicated that further technical guidance will be published by July 2026, with additional stakeholder engagement taking place ahead of final guidance being issued later this year (likely to align with Autumn Budget 2026). Members are encouraged to make customers aware of the forthcoming changes and advise them to seek support from payroll or tax advisers where necessary.
Members will find two sections of this guidance of interest – Benefit type F – cars and Benefit type G – vans, which details the specific information that will be needed for the payrolling of a company car, salary sacrifice and van BiK from April 2027: Mandatory payrolling of benefits in kind and expenses – interim guidance and legislation - Annex 3 – additional benefits in kind fields likely to be required on Full Payment Submission returns - Guidance - GOV.UK
Any comments or concerns can be sent to [email protected].
