What’s Changing in the U.K.?
From 6 April 2027, most Benefits in Kind (BiKs) and employment-related expenses will need to be reported and taxed through payroll. The HMRC has issued interim guidance and set deadlines for voluntary registration before the 2026–27 tax year begins. (gov.uk)
Key Dates & Requirements
| Date | Requirement | Who Is Affected |
|---|---|---|
| 5 April 2026 | Deadline for employers to voluntarily register to payroll BiKs for 2026–27 year. (gov.uk) | Employers currently not automatically payroll-ing BiKs who wish to start voluntarily |
| 6 April 2027 | BiKs reporting/paying via payroll becomes mandatory for most BiKs and expenses. (gov.uk) |
Additional changes will apply to certain beneficial loans and living accommodations—these will become voluntary in 2027–28, with a new registration service introduced. (gov.uk)
Actionable Steps for Employers
- Audit current BiKs: Identify which benefits and expenses are considered “in-kind” under HMRC regulations (company cars, private medical insurance, etc.).
- Assess payroll software readiness: Ensure payroll systems can capture and report BiKs in real time. Seek vendor updates or plan customizations.
- Communicate with employees: Make sure staff understand how benefits will be reported via payroll, how tax codes may change, and when adjustments affect take-home pay.
Risks of Non-Compliance
- Mistakes or delays in registering before the voluntary deadline could lead to under-reporting.
- Using outdated payroll systems could trigger penalties once the mandatory rules are active.
- Mistiming the volunteer-to-mandatory shift may affect employee trust and financial planning.
Example Scenario
GlobalTech UK Ltd. offers private medical insurance and company cars to its employees. It uses payroll software that doesn’t yet integrate real-time BiK reporting. To comply:
- By 5 April 2026, they register voluntarily and parallel-run manual BiK reporting as a pilot.
- Update payroll software.
- From 6 April 2027, all BiKs are reported through payroll, including employer-paid meals and accommodation where applicable.
This phased approach reduces risk and distributes workload.
In Summary: Preparation now enables smoother compliance later—early registration, system upgrades, and employee communications are key to avoiding costly errors when mandatory payrolling arrives.