Compliance
What Employers Need to Do: Payrolling Benefits in Kind & Student Loan Plan 5 from April 2026
Several key compliance shifts hit UK employers in April 2026—mandatory payrolling of Benefits in Kind moves closer, and a new student loan plan (Plan 5) takes effect. Prepare now to avoid penalties.
By NomadicTax Research Team • 5-8 min read • February 28, 2026
## Key Compliance Changes Employers Can’t Miss
### 1. **Payrolling Benefits in Kind (BiKs) Moves to Mandatory**
- Voluntary registration for payrolling BiKs ends **5 April 2026**. Employers must register **before the start of the 2026-27 tax year** if opting for voluntary payrolling. ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-february-2026/february-2026-issue-of-the-employer-bulletin?utm_source=openai))
- From **April 2027**, most benefits and expenses in kind will need to be payrolled mandatorily instead of being reported through annual returns. ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-february-2026/february-2026-issue-of-the-employer-bulletin?utm_source=openai))
### 2. **Student Loan Plan 5 Requirements**
- A new student loan repayment plan, **Plan 5**, starts from **6 April 2026**. Employers must begin deductions for Plan 5 when workers’ earnings exceed the threshold, defaulting to this plan if unsure. ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-february-2026/february-2026-issue-of-the-employer-bulletin?utm_source=openai))
- Key thresholds from April 2026: Plan 1 £26,900; Plan 2 £29,385; Plan 4 £33,795; Plan 5 £25,000; Postgraduate loan £21,000. Repayment rates of 9% or 6% remain. ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-february-2026/february-2026-issue-of-the-employer-bulletin?utm_source=openai))
---
## What Employers Should Do Now
- **Update payroll software**: Ensure systems can handle the changes in BiK payrolling deadlines and student loan plan identification.
- **Communicate** to employees: Inform staff about the coming removal of voluntary payrolling and how their loan repayments might change under Plan 5.
- **Review contracts and HR policy**: Especially sections concerning benefits, expense claims and BiKs; ensure policies refer correctly to the changes.
---
## Examples to Show Impact
- An employer who provides a company car or subsidised accommodation under BiK must decide by 5 April 2026 whether to register voluntarily; failing to do so will require them to shift to mandatory payroll reporting in 2027.
- An employee earning £27,000 per year under a new contract falls under Plan 5 from April 2026, so the employer must start deductions at 9% on earnings above £25,000.
---
## Risks of Non-Compliance
- Missing the 5 April 2026 voluntary payrolling registration can lead to disruption in benefit reporting.
- Failing to adopt Plan 5 correctly may lead to deductions being incorrect, possible back pay or HMRC penalties.
- Inaccurate PAYE codes or tax codes because of incorrect student loan plan could upset employees and require corrections later.
---
## Actionable Checklist Before April 2026
| Task | Who’s Responsible | Deadline |
|---|---|---|
| Register to voluntary payroll BiKs if that's your choice | Payroll/HR | by 5 April 2026 |
| Update payroll software and providers | Finance dept / providers | Before start of 2026-27 tax year |
| Train HR and line managers | HR leads | ASAP |
| Ensure all employees know which student loan plan applies | HR / Payroll | Before 6 April 2026 |
| Adjust policies and reporting templates accordingly | HR / Legal | Before 6 April 2026 |
These changes tighten compliance cycles—preparation now avoids misreporting and employee dissatisfaction. For the best employer practice, build the changes into your payroll calendar for late Q1-2026.