HMRC has confirmed that the planned mandating of payrolling benefits in kind, originally set for April 2026, has now been delayed by a full year and will come into force from April 2027.
For employers, payroll teams, and accountancy firms managing payroll on behalf of clients, this delay provides additional time to adapt internal processes and ensure systems are ready for the eventual transition.
At Qualitas Payroll, we’re committed to keeping our clients informed of regulatory changes and helping businesses prepare efficiently and compliantly.
The Mandate
In the original announcement, HMRC outlined its intention to make the payrolling of most benefits mandatory from April 2026. This would have replaced the traditional annual P11D submissions for many types of benefits, instead taxing them in real time through payroll systems.
The move aimed to modernise and simplify benefit reporting, improve accuracy, and ensure employees were taxed at the correct time rather than retrospectively.
The government has stated that more time is now needed to ensure employers, software providers, and payroll agents are properly prepared for the new requirements.
By extending the timeline to April 2027, businesses now have an additional year to review and update payroll processes, systems integrations, and employee communications.
What Does This Mean for Employers?
- Employers must continue to submit P11D and P11D(b) forms for benefits provided during the 2024/25 and 2025/26 tax years that have not been payrolled. Employers must continue to submit P11D(b) where benefits have been payrolled.
- Voluntary payrolling of benefits remains available for businesses that wish to start earlier and streamline their reporting.
- HMRC will provide further technical guidance and updates closer to the mandatory 2027 date.
If your business is not yet voluntarily payrolling benefits, it is still advisable to begin reviewing your processes now. Voluntary adoption in advance can help reduce year-end pressures, improve compliance, and simplify tax administration for employees.
How Qualitas Payroll Can Support Your Transition
At Qualitas, we’re already working with clients to prepare for the eventual shift towards mandatory payrolling of benefits.
We offer:
- End-to-end payroll management including voluntary benefit payrolling setup
- Expert compliance support to meet current P11D obligations
- Seamless system updates ahead of the 2027 changes
- Employee communication support, helping explain benefit taxation clearly
Whether you are looking to implement voluntary payrolling now or simply want to ensure your payroll is future-proofed ahead of 2027, Qualitas can help.
Get Support with P11d Submissions
While the delay offers additional preparation time, businesses should not become complacent. Early adoption of payrolling benefits can lead to greater efficiency, improved compliance, and a smoother transition when the changes finally take effect.