Introduction

Introduction to the draft guidance and legislation in preparation for reporting benefits in kind (BiKs) in real time.

Employers that report benefits in kind (BiKs) and expenses to HMRC by the P11D and P11D(b) process face an outdated, manual and retrospective system. This means that their employees will not always pay the correct Income Tax owed on their BiKs and expenses in the year that they receive them. Mandating the real time reporting of BiKs and expenses will mean that: 

  • 3.5 million people will no longer have their Income Tax collected in arrears which means that they will be paying the right tax at the right time

  • in terms of simplification, most employers will no longer need to complete P11D or P11D(b) forms

  • it makes it simpler for employees to understand what they are paying tax on – rather than paying tax in arrears, on an estimated basis where BiKs are included in tax codes, they are having tax deducted through PAYE in real time

  • the customer journey is improved for thousands of employers and HMRC by modernising and simplifying the process of reporting and paying tax on all employment benefits

This publication forms part of HMRC’s wider transformation roadmap, which is focused on modernising the tax system to make it more transparent, efficient and real time. Mandatory payrolling of BiKs is a key milestone in this journey, supporting HMRC’s ambition to reduce administrative burdens and improve customer experience through better use of digital reporting.

The information contained in this publication is interim guidance and aims to provide clarity and support to help customers prepare their organisation, systems and processes for the real time reporting of BiKs from April 2027. It is designed to bring together all relevant information about mandatory payrolling of BiKs in one place, making it easier for customers to access and understand.

It sets out the design decisions that have been made since April 2025 and will be continuously updated as further decisions are confirmed. Official guidance will be published from Autumn 2026.

Draft legislation is also included where possible as policy decisions are made. The legislation contained within this publication has not been laid before Parliament. It is being published to help customers understand how guidance aligns with legislation. Both the guidance and legislation may change before final versions are published from Autumn 2026 onwards.

Technical specifications were shared with software developers on 17 November. Software developers should read the technical specifications alongside this guidance to get a better understanding of how real time reporting should work for different benefit in kind (BiK) scenarios.

HMRC continues to engage closely with stakeholders to inform design decisions and ensure this change is delivered as smoothly as possible. We aim to speak with stakeholder groups in the new year to get feedback on this guidance. We also aim to start delivering updated payrolling webinars and publish tutorial videos at this time.