HMRC has confirmed a delay to the planned move to compulsory payrolling of benefits in kind.
The change was originally due in April 2026 but has been put back a year to April 2027. Employers would have been required to process most benefits through payroll instead of using year end P11D forms.
Why the delay?
• HMRC says more time is needed to develop the required systems.
• Payroll software providers and employers also need time to prepare.
• The change will still go ahead, but not as soon as planned.
The current system:
• Most taxable benefits are reported after the tax year using P11D forms.
• Employees are taxed later through an adjustment to their tax code.
• Employers must submit P11Ds by 6 July following the end of the tax year.
• Class 1A National Insurance must be paid by 22 July (or 19 July if paying by post).
What was planned:
• From April 2026, employers would have had to payroll most benefits.
• Tax would be collected through PAYE at the time benefits are provided.
• P11Ds would no longer be required for payrolled benefits.
• Class 1A NIC would still be due, but reporting would be part of a new digital process.
What this means for you:
• You can keep using the current P11D process for now.
• Voluntary payrolling remains an option.
• There is more time to review your payroll systems and plan ahead.
Some employers already payroll benefits to reduce paperwork and provide clearer payslips for employees. It would be adviseable for you to assess if that works for your own business. Is your software ready? Are your payroll teams comfortable with the process?
Now’s the time to explore your options while there’s still flexibility.
If you want to talk it through, we’re here to help.