Compliance
Compliance Essentials 2026: PAYE, Benefits-in-Kind & Employer Obligations
Employers in the UK face new compliance pressures from April 2026, including changes to PAYE tools, payrolling benefits in kind, student loan thresholds, and national insurance on employee perks.
By NomadicTax Research Team • 5-8 min read • March 8, 2026
## Overview of Coming Compliance Changes for UK Employers
Starting from **6 April 2026**, several employer and payroll compliance changes will take effect. These reforms touch on PAYE, reporting of benefits in kind (BiKs), student loan deductions, and national insurance allowances. Employers should prepare to adapt payroll systems and inform affected staff. ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-february-2026/february-2026-issue-of-the-employer-bulletin?utm_source=openai))
## Major Updates Explained
### 1. PAYE Tools & Tax Codes
- HMRC’s **Basic PAYE Tools (BPT)** will be updated to version **26.0** by end of March 2026, in readiness for the 2026-27 tax year. All employers must use the new version from **6 April 2026**. ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-february-2026/february-2026-issue-of-the-employer-bulletin?utm_source=openai))
- For 2026-27, the **Personal Allowance** remains **£12,570**, and PAYE thresholds are set at **£242/week** (or **£1,048/month**). Emergency tax code remains **1257L**. ([gov.uk](https://www.gov.uk/government/publications/p9x-tax-codes/p9x-tax-codes-to-use-from-6-april-2026?utm_source=openai))
### 2. Benefits in Kind (BiKs) Reporting & Payrolling
- Most BiKs (excluding employment-related loans and accommodation) must be reported via payroll software in real time from 6 April 2026. Employers must move away from P11D for many BiKs and start using payroll submissions. ([gov.uk](https://www.gov.uk/government/publications/reporting-and-paying-income-tax-and-class-1a-nics-on-benefits-in-kind-in-real-time/confirming-plans-to-mandate-the-reporting-of-benefits-in-kind-via-payroll-software-from-april-2026?utm_source=openai))
- Voluntary payrolling for loans & accommodation begins in April 2026 with eventual plans to make them mandatory. ([gov.uk](https://www.gov.uk/government/publications/reporting-and-paying-income-tax-and-class-1a-nics-on-benefits-in-kind-in-real-time/confirming-plans-to-mandate-the-reporting-of-benefits-in-kind-via-payroll-software-from-april-2026?utm_source=openai))
### 3. Student Loans Repayment Plan 5 & Thresholds
- Plan 5 is introduced 6 April 2026; agents and employers will receive notices in March to guide new deductions. ([gov.uk](https://www.gov.uk/government/publications/agent-update-issue-140/issue-140-of-agent-update?utm_source=openai))
- New thresholds: Plan 1 – **£26,900**; Plan 2 – **£29,385**; Plan 4 – **£33,795**; Postgraduate loans – **£21,000**; Plan 5 – **£25,000**; repayment rates remain at 9% for Plans 1-5; postgraduate loans at 6%. ([gov.uk](https://www.gov.uk/government/publications/agent-update-issue-140/issue-140-of-agent-update?utm_source=openai))
## Practical Compliance Checklist for Employers
- Update payroll software or with payroll provider to ensure BPT version 26.0 is applied by start of year.
- Educate payroll staff about the shift toward real-time BiK reporting. Adjust internal procedures to account for BiKs data gathering throughout year, not at year end.
- Review employment contracts regarding employee benefits to determine which perks may now attract taxation or disclosure via payroll.
- Update starter checklists with new student loan Plan 5 threshold; ensure all employees’ plan types are recorded correctly. Monitor HMRC notices to ensure correct deductions.
- Audit payroll codes before 6 April to confirm correct tax codes (prefixes, emergency codes), weekly/monthly thresholds etc.
## Example Compliance Situation
An employer with ten staff, some receiving benefits such as gym memberships, phone contracts, or work equipment:
- From 6 April 2026, those benefits (excluding housing or loans) will need to be submitted as BiKs via payroll in real time. The year-end P11D will not be sufficient.
- Employees on student loan plans will move to Plan 5 if they are new borrowers; deductions thresholds change so payroll needs to pick correct thresholds.
**Bottom line:** Employers must start preparing now. Systems, software, staff training, contract reviews—all should be addressed in the months leading up to April 2026.