Annex 2 – draft legislation

Draft legislation for illustrative purposes.

Secondary legislation to be published in draft by Autumn 2026

The following draft secondary legislation has been included for illustrative purposes only. We aim to publish final drafts of all legislation by Autumn 2026.

These include:

  • to mandate employers to report all BiKs provided during the year, except for employment related loans and accommodation, in real time using payroll software from 6 April 2027 – Mandating statutory instrument
  • loans and accommodation – where employers have requested authorisation to payroll employment-related loans or living accommodation voluntarily from HMRC, the legislation will mandate employers and agents to use the proposed calculation method to estimate and report the taxable value of employment-related beneficial loans and living accommodation via payroll software in real time on a voluntary basis – Loans and accommodation statutory instrument
  • to mandate the real time reporting and payment of Class 1A liabilities on all benefits in kind (BiKs), except for loans and accommodation – Social security (contributions) regulations 2027
  • the end of year process – this will be included in future updates

Secondary legislation to be published in draft between February and July 2026

The following secondary legislation will be published in draft between February and July 2026. This is not an exhaustive list as further legislation may be needed as decisions are made:

  • the introduction of the voluntary registration process for employment related loans and accommodation
  • the introduction of an exceptions process for those employees whose BiKs cannot be payrolled
  • the end of year process
  • temporarily remove the application of inaccuracy penalties for the reporting and payment of Income Tax and National Insurance contributions 1A on BiKs – for a period of 1 year, from April 2027 to April 2028, for employers who use payroll software to report and pay Income Tax
  • payrolling of classic cars
  • primary legislative changes to provide the power for this secondary legislation, where not already provided

The vires for this secondary legislation will be contained within primary legislation. A draft of this legislation will be published by Autumn 2026 alongside the final draft for secondary legislation.

Legislation, for the removal of the current registration process for voluntary payrolling of benefits in kind, will be drafted and laid in parliament between February and March 2026.

Further primary and secondary legislation will be published as and when it is drafted as necessary.