22 | TECHNICAL
Payrolling benefits in kind – a journey
H ow is it nearly July again already? It doesn’t feel that long ago we were all wrapping up against the freezing cold of winter and, let’s face it, much of spring. I hope the summer months are bringing you all lovely sunny weather, but with this warmth also comes the looming deadline for P11D submissions, to report the benefits in kind (BiKs) you offer to employees. Ahead of this deadline, we thought we’d take another look at the journey we’ve been on in relation to the mandatory payrolling of BiKs. This key topic is on the minds of every pay professional, whether you’re in- house, helping clients in a bureau or you’re developing payroll software. So, what are the key details you need to know ahead of 6 April 2027, when payrolling BiKs is set to become mandatory? Where we’ve come from Payrolling benefits isn’t anything new. In
fact, voluntary payrolling of BiKs and taxable expenses began in April 2016, marking a significant shift towards real-time reporting. It meant that employees could start paying income tax on their benefits through pay as you earn or ‘PAYE’ as they received them, rather than after the end of the tax year. To begin with, you could ‘informally payroll’ BiKs throughout the course of the tax year. This required the values to still be reported on the P11D; just with ‘payrolled’ written across the top of the form, so that HM Revenue and Customs (HMRC) knew not to code out the tax liability. This practice of informally payrolling came to an end in April 2023. Since then, employers and agents have been required to register with HMRC before the start of the tax year in which they wanted to payroll benefits. From that point on, there was no need to submit a P11D for those items anymore. Please note, though, that if you / your clients provide loans or accommodation,
these benefits cannot be voluntarily payrolled, and therefore still require a P11D to be produced. Employers and agents who payroll BiKs also currently still need to produce a P11D(b), to pay the associated Class 1A National Insurance contributions (NICs). Findings from our Payroll Insight Surveys show that only 18% of respondents from in- house payroll teams are solely reporting BiKs via voluntarily payrolling, with 28% reporting they use a mix of P11Ds and payrolling. You can view the full findings from our 2025 reports here: https://ow.ly/EewL50YXzjB.
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