Mandatory Payrolling of Benefits Delayed Until 2027 – What Employers Need to Know
If your business provides benefits like company cars, medical insurance, or gym memberships to employees, there’s an important update you should be aware of: the government has delayed the start date for mandatory payrolling of benefits in kind.
This shift – originally planned for April 2026 – will now come into effect in April 2027.
What Is Payrolling of Benefits?
Traditionally, employers report taxable benefits and expenses annually via P11D forms, with Class 1A National Insurance (NI) due by 6 July following the tax year. This approach creates a delay between when the benefit is received and when the tax is paid.
Payrolling of benefits is a system where the tax due on employee benefits is processed in real-time through the payroll, meaning employees pay tax on these perks as they receive them — and employers can skip the annual P11D filing (for most benefits).
The Original Plan
Back in 2024, HMRC announced that from April 2026, payrolling all benefits (except employer-provided accommodation and loans) would become mandatory for all employers.
The Delay – Now April 2027
However, in April 2025, the government postponed the start date by one year, meaning mandatory payrolling will now begin from April 2027.
This gives employers more time to prepare – especially those who haven’t yet adopted the voluntary system.
Note: A technical note has been published by HMRC, offering early insight into how the new system will work. Final rules will be confirmed once the legislation is passed. We’ll provide updates as this develops.
What If You’ve Already Registered for 2025/26?
Many businesses have voluntarily opted in to payroll benefits before the original 2026 deadline. If that’s you:
You must continue payrolling benefits for the 2025/26 tax year as planned.
The delay does not cancel or pause your registration.
You are now part of the real-time benefit reporting system and should not revert back to P11Ds (unless instructed by HMRC).
What Does This Mean for Your Business?
If you haven’t registered yet:
- You have until April 2027 to make the switch.
- It’s a good idea to start preparing early, especially reviewing systems, payroll software, and benefit policies.
If you’ve already registered:
- Keep doing what you’re doing for the current year (and beyond).
- Ensure your payroll provider or accountant is aware and up to speed.
What Should You Do Now?
Here’s how Merranti Accounting can help:
Check your current benefit setup – Are you providing reportable benefits that should be payrolled?
Review your payroll software – Does it support payrolling benefits?
Plan ahead – For a smooth transition before the April 2027 deadline.
Speak to us – If you’ve already registered and need support managing payrolled benefits for 2025/26.
Need Help with Payroll or Benefits?
Whether you’re new to payrolling or already enrolled, Merranti Accounting can help you prepare, stay compliant, and manage the transition smoothly.
