Compliance
Planning for Mandatory Payrolling of Benefits-in-Kind (BiKs) from April 2026
From April 2026 UK employers must report most Benefits-in-Kind via payroll software in real time, creating a shift from the old P11D system. Here’s how businesses can get ready.
By NomadicTax Research Team • 5-8 min read • March 11, 2026
## What’s Changing
- From **6 April 2026**, most Benefits-in-Kind (BiKs) and associated Class 1A National Insurance Contributions (NICs) must be reported and paid via payroll software in **real time** on the Full Payment Submission. ([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))
- The old P11D / P11D(b) process will still be allowed *initially* for employment-related loans and accommodation only. These will transition later to mandatory reporting. ([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))
- The mandatory payrolling requirement will be phased in, with most BiKs included from April 2026. Full scope for loans and accommodation will follow after consultations. ([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))
## Why This Matters
- **Compliance risk**: moving to software-based reporting means BiKs no longer reported retrospectively via P11Ds will need accurate tracking throughout the tax year.
- **Administrative burden**: employers will need updated payroll systems and internal processes.
- **Cashflow & penalties**: missing or incorrect BiK reporting can lead to NIC and tax underpayments, and possible penalties once the system fully operates. Phase-in periods offer some protection. ([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))
## Actionable Steps for Employers
1. **Audit current BiKs** — catalogue all employee benefits, loans, and accommodation arrangements. Identify those provided by third parties.
2. **Upgrade payroll software** — ensure your system can handle real-time BiK inputs, compute tax/NIC, integrate with Full Payment Submission.
3. **Train payroll / HR teams** — clarify roles: who is responsible for tracking loans, accommodation costs, benefit valuation.
4. **Communication with employees** — make sure staff know changes, especially around taxation of loans/accommodation, impact on take-home pay.
5. **Plan for transition** — register for voluntary payrolling where allowed before April 2026, so your business is familiar with process and expectations. ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-february-2026/february-2026-issue-of-the-employer-bulletin?utm_source=openai))
## Example Case
- A medium-sized business currently uses P11Ds for staff accommodation. From April 2026, these items must be reported via payroll software if they fall under BiKs excluding loans/accommodation. But since accommodation is exempt initially, they can continue using P11D for now — however, valuation, timing, and data must be ready for future changes.
- Another example: a company offering non-cash incentives/vouchers. Under BiKs rules, these must be grossed up, reported, and subject to tax/NIC via payroll from April 2026. Failure to gather invoice details early could lead to estimations or later corrections.
## Key Takeaways
- Employers must **prepare now** — technical system changes, process changes, data gathering.
- For relief and less risk, use voluntary payrolling early where available.
- Understand which benefits are in scope and how valuation will work.
- Engage with payroll professionals or tax advisers to ensure compliance ahead of the deadlines.
By staying ahead, businesses minimise disruption and avoid surprises when the changes take effect in April 2026.