HMRC has released further guidance on the upcoming changes to the payrolling of benefits in kind (BiKs).
Below is a concise summary of the key dates, the treatment of beneficial loans and employer provided accommodation, and the new process for BiKs where the taxable value cannot be finalised during the year.
We hope you find the update below helpful.
Key dates related to BiK payrolling changes
- Voluntary payrolling for 2026/27
Employers wishing to payroll benefits voluntarily must register by 5 April 2026. Registration cannot be made once the tax year has started.
- Closure of the current registration tool
HMRC will close the existing voluntary registration service on 6 April 2026Mandatory payrolling from 2027/28
From 6 April 2027, most BiKs must be payrolled. HMRC has published an updated technical note. Please click here for more information
- Loans and living accommodation
These benefits will remain voluntary for 2027/28. Employers choosing to payroll them will need to use a separate registration process, which HMRC will launch ahead of April 2027
BiKs and expenses not known during the year
HMRC recognises that some BiKs cannot be valued accurately in real time. This includes for example:
- Fuel cards
- Employment-related loans
- Employer-provided accommodation
In these cases, employers will need to use a reasonable estimate during the year, with final adjustments made through the BiKs update process as explained below.
BiKs update process – key points
- Used to correct under or overpayments of tax
- All BiKs must be reported by 6 July following the tax year
- Additional tax will be reconciled through P800, Simple Assessment, or Self-Assessment
- Additional Class 1A NICs must be paid by 22 July
- Penalties for inaccurate returns will be waived for 2027/28 to support transition
HMRC is continuing to review specific scenarios and will issue further clarification where needed.
BiK payrolling changes: Practical steps for employers
To prepare for the changes, employers may wish to:
- Review existing loans and accommodation arrangements
- Ensure accurate data capture for interest-free or low-interest loans
- Assess whether payrolling these benefits would reduce P11D administration
- Confirm payroll system capability for real-time reporting
- Begin planning employee communications where net pay may be affected
How Abbiss Cadres can help
We can support you by:
- Reviewing your current benefits and payroll processes
- Assessing payroll readiness for the 2027/28 changes
- Advising on the correct treatment of loans and accommodation
- Preparing employee communications
- Assisting with updating internal processes as HMRC releases further updates
- Operating your payroll and benefits reporting on your behalf using our state-of-the-art payroll software
If you would like to discuss how these changes may affect your organisation, get in touch.
