Mandatory payrolling of benefits in kind and expenses – interim guidance and legislation

Draft interim guidance and legislation to aid preparation for reporting benefits in kind (BiKs) and expenses in real time, through payroll software, from April 2027.

• Introduction

  Introduction to the draft guidance and legislation in preparation for reporting benefits in kind (BiKs) in real time.

• Who should read this

  You should read this guidance if you report benefits in kind and expenses to HMRC on behalf of your employees, provide payroll services to employers, develop payroll software, or provide benefits in kind to employers.

• The phased introduction of mandatory payrolling for benefits in kind

  Mandatory real-time reporting of Income Tax and Class 1A National Insurance contributions for certain benefits in kind (BiKs) and taxable expenses will now be phased in from 6 April 2027.  

• The default operation of mandatory payrolling

  Real time reporting of benefits in kind and expenses from April 2027.

• Reporting requirements

  Reporting requirements for benefits in kind (BiKs) from April 2027.

• Getting ready for mandatory payrolling of benefits in kind

  Information about how to get ready for mandatory payrolling of benefits in kind (BiKs).

• How to report a benefit in kind in real time

  Setting out the general principles of how to report different benefits in kind (BiKs) in real time and how to apply those general principles to various specific situations.

• What happens when the full amount of tax cannot be collected either within a pay period or tax year

  Information about what happens when the full amount of tax cannot be collected either within a pay period or tax year.

• Reporting Class 1A National Insurance contributions

  Information about reporting Class 1A National Insurance contributions.

• Dealing with employees who leave during the tax year

  Dealing with employees who leave during the tax year – including in year corrections and expenses which could not be accounted for during the year.

• Penalties and interest

  Information about penalties and interest.

• Mergers and acquisitions

  Information about mergers and acquisitions.

• Moving employees from one payroll to another

  Where to find information about moving employees from one payroll to another.

• Payment reference numbers, P60s and P45s

  Information about payment reference numbers, P60s and P45s.

• Future updates and timeline of delivery

  A timeline of what we expect to deliver between now and April 2027.

• What to do if you have questions or concerns

  Who to contact if you have questions or concerns about this guidance.

• Annex 1 – payrolling examples for different scenarios

  Payrolling examples for different scenarios including gym membership, classic cars, accommodation, loans and dealing with different payroll frequencies.

• Annex 2 – draft legislation

  Draft legislation for illustrative purposes.

• Annex 3 – additional benefits in kind fields likely to be required on Full Payment Submission returns

  Information about the additional benefits in kind (BiKs) fields likely to be required on Full Payment Submission (FPS) returns.