HM Revenue & Customs (“HMRC”) has announced a further delay to the full implementation of the mandatory payrolling of benefits in kind (“PoBIK”).
Background
Historically, employers have been required to report employee benefits, such as company cars, private medical insurance, and gym memberships, retrospectively using the P11D form submitted after the close of the tax year. The transition to mandatory payrolling requires these benefits to be calculated, reported, and taxed in real time through the standard Full Payment Submission (“FPS”) process.
Revised Timeline
Originally scheduled to commence in April 2026, it was announced last year that the implementation date would be delayed for an extra year. The latest announcement introduces a phased implementation with the more common benefits still being due to start in April 2027 as set out in the table below:
| Phase | Start Date | Benefits Included |
|---|---|---|
| Phase 1 | 6 April 2027 | Company cars, car fuel, vans, van fuel, employer-provided medical benefits |
| Phase 2 | 6 April 2028 | Most other benefits in kind, accommodation, loans |
| Phase 3 | Not yet stated | To be announced |
HMRC has recognised that employers may have had technical difficulties with some benefits and the technical specifications and associated notes will be issued soon.
How does this affect employers?
Employers will need to decide whether they wish to delay the phase 2 benefits or introduce PoBIK for all benefits from April 2027. This will depend on the type and complexity of benefits that are provided.
Many employers have already started PoBIK ahead of the statutory date, with data assimilation, payroll processes and employee communication already being in place. For these employers it will not normally be appropriate to disturb this timeline.
As employee communication is a key element of this transition, those who have not yet started the process will need to consider, based on the types of benefit, whether they introduce a full PoBIK implementation in April 2027. If those other benefits are straightforward to quantify in real time, this full implementation will be a consideration.
It should be noted that HMRC has said that employers will be able to register for voluntary payrolling from November 2026 for all other benefits in kind that have not been mandated to be payrolled from April 2027, including loans and accommodation.
How can UNW help?
This further delay is HMRC’s recognition that this can be a complex area.
UNW’s employment taxes team has extensive knowledge and experience of supporting employers in a range of areas. We can work with employers to formulate a detailed project plan and to assist with implementation or can help employers on specific aspects of the implementation.
If you would like to discuss how we can help you, or have any other employment taxes related queries, please get in touch with us at employmenttaxesteam@unw.co.uk
