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Benefits in Kind (BIK) Payrolling Changes: What Employers Need to Do Before April 2027

Changes to how Benefits in Kind (BIKs) are reported and taxed are coming into force from April 2027, and they will affect employers of all sizes.

While the move to mandatory payrolling is designed to simplify tax collection for employees, it will require employers to adapt their payroll processes and reporting.

Importantly, there is a key deadline in April 2026 for businesses that want to prepare early.

What’s changing from April 2027?

From April 2027, most Benefits in Kind will need to be processed through payroll in real time, rather than reported annually via P11Ds.

This means:

  • Tax will be collected monthly through PAYE
  • The traditional P11D process will largely be removed
  • Employers will need to calculate benefit values each pay period

This represents a significant shift from annual reporting to ongoing, real-time compliance.

What happens in April 2026?

For the 2025/26 tax year, nothing changes from a compliance perspective:

  • P11Ds are still required
  • Existing reporting deadlines still apply

However, April 2026 is a key point for employers considering early preparation.

Register before: 5 April 2026

To voluntarily payroll benefits for the 2026/27 tax year, you must register with HMRC before this date.

Missing this deadline means:

  • You must continue using P11Ds for the full 2026/27 tax year
  • You won’t be able to trial payrolling ahead of the 2027 changes

Why preparing early matters

Moving to real-time payrolling introduces additional complexity, particularly where:

  • Benefits vary throughout the year
  • Values are not fixed
  • Processes are currently manual

Which allows you to:

  • Test systems and processes
  • Reduce the risk of errors
  • Ensure employees understand how their benefits are taxed

What should employers be doing now?

This is the ideal time to start preparing:

  • Review the benefits you provide to employees
  • Assess whether voluntary payrolling is right for your business
  • Ensure your payroll systems can handle real-time reporting
  • Consider how data will flow between payroll, HR and finance

How we can help

Our payroll team can support you with:

  • Assessing whether payrolling benefits is suitable
  • Managing registration ahead of the April 2026 deadline
  • Preparing your payroll processes for the 2027 changes

Get in touch to discuss how these changes affect your business