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Mandating the Payrolling of Benefits in Kind Delayed Until 06 April 2027

30 - 04 - 2025

Mandating the payrolling of expenses and benefits-in-kind has been delayed to 6^th April 2027. 

HMRC has announced additional time to prepare for the reporting of Income Tax and Class 1A NICs for most benefits in kind and taxable expenses. Originally due to be mandatory from 6 April‌‌‌ 2026, HMRC’s latest technical note confirms that the changes will take place from 06 April 2027.

Payrolling Benefits in Kind enables the reporting of most employee benefits through Real Time Information (RTI). The value of a benefit is added to the employee’s salary so that the correct amount of PAYE is automatically deducted during the tax year. The new system would eliminate the need to produce and file P11D forms for employees after the payroll year end.

 

Since April 2016 it has been possible for employers to use the system on a voluntary basis.

 

The delay is intended to provide more time for employers, software providers and agents to prepare. HMRC’s technical note provides more information on how employers can adapt to these changes in time for 6‌‌‌ April 2027.

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Fixed Data

Assumptions

General                                                                                                                              

• The user is over 21 and subject to tax in the UK
• The user wishes to minimise their tax liability
• The user is subject to national insurance i.e.he/she is not over retirement age
• Only current tax rates and limits are applied
• No tax mitigation payments are made e.g. pension contributions
• Only 3 digit letter 'L' tax codes shown in the drop down list can be entered 
• The user does not have a turnover greater than £100,000 where fewer reliefs and or higher taxes may apply

Expenses

• All miles claimed as expenses are for business use using a personally owned car or van
• All other expenses claimed are wholly, necessarily and where appropriate exclusively for the benefit of the business

Foremans LLP Charges

• Foremans fees associated with Limited Company, Sole Trader or Umbrella are as per published rates
• Foremans current Service Costs are allowed for in all calculations.

Holiday Pay

• Holiday pay is accumulated week by week by Umbrella or Agency employer but paid out during the year

VAT

• Limited Company or Sole Trader will be VAT registered
• Limited Company or Sole Trader will take advantage of Flat rate VAT
• Flat rate applied includes the benefit of the additional 1% applicable to the first year of VAT registration

Limited Company Conditions

• One director / one shareholder in a Personal Service Company
• Director of Personal Service Company elects to vote for 100% dividend after salary, costs and expenses
• Director's salary is maximum salary to the primary threshold for NI
• The Limited Company is trading normally i.e it is not subject to IR35 and is not a Managed Service Company

NOTES

• The Current tax rates are taken from the Fixed Data Table
• The current Value Added Tax Rate is 20% and is applied to all invoices and expenses as appropriate
• The Director's Salary is fixed in relation to National Insurance thresholds. Higher Rate Taxpayers should consider the advantages and disadvantages of a larger annual salary or bonus
• Higher Rate Taxpayers may wish to consider the advantages and disadvantages of shared ownership of their business
• Users with a tax code other than three digits and letter "L" may telephone or email our Development Department to request a detailed calculation
• Generally the use of an Umbrella rather than an Agency payroll is only efficient if sufficient weekly expenses are allowable and claimed
• The expenses claimed under an Umbrella should not prevent the proper operation of National Minimum Wage