MANDATORY REPORTING OF BENEFITS IN KIND FROM APRIL 2027: WHAT EMPLOYERS NEED TO KNOW
HMRC Policy Update – 23 July 2026
HMRC has announced important changes to the way employers report Benefits in Kind (BiKs). From April 2027, most employers will need to report certain Benefits in Kind through payroll software using Real Time Information (RTI) instead of relying mainly on end-of-year reporting.
What Is Changing?
A Benefit in Kind is a non-cash benefit provided by an employer to an employee, such as a company car, private medical insurance, company van or fuel.
Currently, many Benefits in Kind are reported after the end of the tax year, mainly through the P11D process.
From 6 April 2027, most employers will be required to report the following benefits through payroll:
Medical benefits
Company cars
Company vans
Car and van fuel
The related Income Tax and Class 1A National Insurance will be dealt with through the payroll process during the year.
What Happens From April 2028?
HMRC will introduce the changes in stages. From 6 April 2028, mandatory payrolling will extend to most remaining Benefits in Kind.
However, employer-provided loans and accommodation will remain outside mandatory payrolling for the time being.
This means employers should continue to follow HMRC guidance for benefits that are not yet covered by the new rules.
What Does This Mean for Employers?
Employers and payroll teams will need to prepare for the new reporting process.
They should:
Review the Benefits in Kind currently provided to employees.
Identify which benefits will be affected from April 2027.
Check whether their payroll software supports the new RTI requirements.
Review existing P11D and payroll processes.
Ensure HR and payroll teams have accurate benefit information.
Test updated payroll processes before April 2027.
HMRC expects the change to reduce administrative work over time, although employers may need some initial time to understand the new requirements and update their processes.
What Should Employers Do Now?
Employers should start preparing early rather than waiting until April 2027.
Reviewing benefits, payroll systems and internal processes now will help businesses avoid errors and ensure a smooth transition.
Key Takeaway
HMRC is moving Benefits in Kind from a mainly annual reporting process to real-time payroll reporting.
The first major changes will take effect from 6 April 2027, with further Benefits in Kind brought into mandatory payrolling from April 2028.
Employers should review their current Benefits in Kind and payroll arrangements now to make sure they are ready for the new requirements.
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