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Discover which benefits fall under a phased introduction from 2027
HMRC has confirmed that the mandatory real-time reporting of benefits in kind and taxable expenses will be introduced on a phased basis from 6 April 2027.
Under the revised timetable, only a limited range of benefits will be subject to mandatory payrolling from April 2027. These include company cars, car fuel, vans, van fuel and employer-provided medical benefits. The majority of other benefits in kind will not become subject to compulsory real-time reporting until at least April 2028.
One of the most significant changes is HMRC’s decision to remove 94 benefits-related data fields from the initial phase of the programme. This substantially reduces the scope of the first-stage rollout and represents a considerable scaling back of the original proposal, which would have brought most benefits in kind into the mandatory payrolling regime at the same time.
Under payrolling arrangements, the taxable value of benefits and expenses is reported through the Full Payment Submission (FPS) process, enabling tax and Class 1A National Insurance contributions (NICs) to be collected in real time rather than through year-end reporting.
The latest announcement establishes a two-phase implementation programme:
Phase 1 – From 6 April 2027
Mandatory payrolling will apply to:
- company cars
- car fuel
- vans
- van fuel
- employer-provided medical benefits.
Phase 2 – From 6 April 2028
Most remaining benefits in kind will become subject to mandatory payrolling. However, beneficial loans and accommodation-related benefits will continue to operate under voluntary arrangements rather than becoming compulsory.
Nevertheless, employers must be aware that traditional reporting obligations will remain in place for many benefits. Forms P11D will continue to be required for benefits that fall outside the mandatory payrolling regime until further reforms are introduced.
Businesses already participating in HMRC’s voluntary payrolling arrangements will be permitted to continue reporting all benefits through payroll if they choose.
Employers will need clear and comprehensive guidance from HMRC on how the mandatory and voluntary systems will operate alongside one another.
HMRC has committed to updating its technical guidance by July, with final guidance for Phase 1 expected to be published alongside the Autumn Budget.
Useful resources
Read ACCA’s technical factsheet: treatment of benefits in kind – P11D guidance