The changes to payrolling Benefits in Kind (BIK) may not become mandatory until April 2027, but preparation is key.
Many businesses are already taking steps to voluntarily adopt the new system — giving themselves valuable time to adapt, refine processes, and address any potential issues before the transition becomes compulsory.
As the deadline approaches, HM Revenue & Customs (HMRC) will face high demand for guidance and support. Acting early means avoiding the rush and ensuring your systems are compliant well in advance.
Our expert team can help you understand, prepare for, and implement the changes to payrolling Benefits in Kind with confidence.
It’s likely that your current methods of tracking and recording employee benefits will need updating to align with the new reporting requirements. To help you navigate these changes, we’ve produced a detailed guide that explains what’s changing, how it will affect your business, and the steps you can take now to stay ahead.
Frequently Asked Questions
What is changing with payrolling Benefits in Kind?
Currently, benefits are reported annually using P11D forms, and the related National Insurance Contributions (NICs) are paid in a single lump sum at the end of the tax year.
From April 2027, this process will move to a monthly payroll model.
Tax and NICs will be paid monthly, alongside salaries, and an annual summary of payrolled benefits will be issued each 1 June.
What are the key dates?
- Voluntary registration: Open now
- Mandatory start date: 6 April 2027
- Further guidance: Expected later this year, with software updates due in December 2025
I already payroll Benefits in Kind – do I need to do anything?
Yes. Even if you already payroll BIK, you’ll need to re-register before 5 April 2027 to remain compliant.
Voluntary payrolling has been in place since 2016, so re-registering ensures your business is aligned with the latest system.
What data do I need to gather?
You’ll need to ensure that all benefits have an assigned monetary value, allowing for accurate calculation of tax and NICs.
What should I communicate to employees?
Transparency is key. Benefits in Kind must be included on payslips, alongside an annual statement issued on 1 June, helping employees understand the value and impact of the benefits they receive.
Will this affect cash flow?
Possibly. Shifting from annual to monthly payments will change your cash flow cycle, but it can also make payments more manageable by spreading them across the year rather than paying a large lump sum annually.
What happens if we don’t prepare?
HMRC is expected to be flexible during the initial rollout, but penalties will apply once the system is established.
Taking steps now will ensure that your business is compliant and ready when the changes take effect.
Plan ahead — stay compliant
The 2027 deadline may feel distant, but the transition to payrolling Benefits in Kind is a significant change.
Give your business the time it needs to prepare properly.
