From 6 April 2027, employers must process the following BIK through the payroll: 

• company cars and fuel;
• company vans and fuel; and
• employer-provided medical benefits, including private medical insurance (see HMRC’s guidance for more examples). 

All other benefits, with the exception of loans and accommodation, must be payrolled from April 2028. Employers can register to payroll other benefits on a voluntary basis for 2027/28. 

An exception from mandatory payrolling applies where the employee is an eligible globally mobile employee. The exception must be applied for.  

What does payrolling involve? 

Where mandatory payrolling applies, or the employer has volunteered to payroll BIK, they must: 

• report the taxable value of the BIK on their full payment submission;
• deduct income tax in real time; 
• (for 2027/28 onwards), account for Class 1A national insurance contributions in real time; and 
• provide all employees in receipt of payrolled BIK with an annual payrolled benefits statement.  

Mandatory payrolling replaces the need to report BIK using forms P11D and P11D(b). However, forms P11D and P11D(b) will still be required where non-payrolled BIK are provided.

Learn more by reading ICAEW's explainer article.  

Payrolling on a voluntary basis

Employers can use HMRC's payrolling benefits and expenses online service to register to voluntarily payroll BIK for 2027/28. Agents can access the service through their agent services account. 

Employers wishing to register for 2027/28 can do so now and must do so before 6 April 2027. 

Eligible globally mobile employees 

HMRC's guidance explains that the term 'globally mobile employee' includes employees who work, or are likely to work:  

• both in and outside the UK;
• in the UK, and receive benefits or expenses from their employer outside the UK; or 
• outside the UK, and receive benefits or expenses from their employer in the UK 

An employer may be able to get an exception for a globally mobile employee where the working arrangements mean that: 

• the employee is likely to receive benefits or expenses in at least two pay periods in a tax year; and
• the employer will not have enough information to payroll the benefits or expenses when the employee receives them.  

HMRC's guidance explains how and when to apply for an exception.  

How to prepare for mandatory payrolling 

The start of mandatory payrolling is now less than five months away and it is important that employers and their advisers begin to prepare if they have not done so already.