In Brief: From 6 April 2027, you must payroll company cars, car fuel, vans, van fuel, and medical and dental benefits, with no registration needed. To payroll other benefits in 2027/28 (including loans and living accommodation), register with HMRC between November 2026 and 5 April 2027. If you’re already registered, your registration carries on.
Last updated: October 2026
The government announced on 16 January 2024 that it would make payrolling benefits in kind mandatory. After a few updates, HM Revenue & Customs (HMRC) confirmed in June 2026 that it’ll be phased in from April 2027.
The aim is to cut admin by moving the reporting of employee benefits into real time.
If you haven’t started payrolling benefits yet, now’s a good time to get familiar with the process, weigh up the pros and cons, and think about how it’ll affect your organisation’s finances.
Before you start feeling overwhelmed, don’t worry. We’ve got you covered. This guide gives you everything you need to know about registering for payrolling benefits, from which benefits you can payroll, to how to report them and pay HMRC.
What are the benefits you can payroll?
To make things easier for you, here’s how common benefits fit into the two phases:
- Must be payrolled from 6 April 2027: company cars, car fuel, vans, van fuel, and medical and dental benefits (such as private medical insurance).
- Must be payrolled from 6 April 2028: most other taxable benefits, including gym memberships, extra mobile phones, childcare vouchers or subsidies above the exempt limit, non-exempt travel expenses, and meals provided by the employer. You can choose to payroll these in 2027/28 if you register in time.
- Optional: living accommodation and loans. These sit outside the mandatory rules, but from April 2027 you can choose to payroll them too.
How do you register for payrolling benefits?
The good news is that you don’t need to register for phase one benefits. From 6 April 2027, payrolling them simply becomes the default.
For anything else, it’s fairly straightforward. Register with HMRC through the payrolling employees’ taxable benefits and expenses online service. The service is closed for 2026/27, but it reopens in November 2026 for the 2027/28 tax year, with a deadline of 5 April 2027.
Once you’ve registered, you won’t need a P11D for the benefits you payroll. You’ll just need to tell HMRC which benefits you want to include during registration.
All employees receiving those benefits will have their tax codes adjusted, unless you exclude specific people in the online service. Be aware that you can’t exclude anyone from phase one benefits.
For example, an organisation offering company cars and staff loans (over the £10,000 tax-free threshold) would payroll the cars automatically from April 2027. It would only need to register if it also wanted to payroll the loans.
If you miss the registration deadline, you won’t be able to payroll voluntary benefits until the next tax year.
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How do you tell your employees about payrolling benefits?
After registering, the next step is to give your employees written notification explaining payrolling and how it affects them. The same goes for phase one benefits from April 2027, even though you won’t register for them.
You must also give them written details of their payrolled benefits by 1 June after the end of each tax year.
You can do this via:
- Letter
- Payslip
Your notification should reassure employees that they won’t be taxed twice. HMRC removes payrolled benefits from their tax codes, so the tax is only collected through payroll.
What else should you include in your written notification?
So everyone’s on the same page, include details of all the benefits you’ve payrolled (their full descriptions and cash equivalents) and confirm that tax has been deducted through Pay As You Earn (PAYE).
You should also show any amounts payrolled under optional remuneration arrangements (where an employee gives up salary in exchange for a benefit), and list any benefits you haven’t payrolled.
This gives employees a clear picture of their taxable benefits and helps them understand their pay.
Is there anything else your employees need to know?
Let your employees know that their tax codes will change to remove benefits in kind adjustments. For phase one benefits, HMRC will do this automatically before 6 April 2027. A lot of employees don’t realise that tax underpaid in earlier years can still stay in their tax code, so it’s worth mentioning.
Each month, the benefit’s value goes through payroll and they’re taxed on it.
At the end of the year, you’ll give them a statement showing the taxable benefits they received and what they were.
What to do for new employees
For new employees with payrolled benefits, explain how the tax works.
Their tax code may still reflect benefits from a previous job, but your benefit won’t be included in it, as it’s taxed through your payroll instead.
It’s also worth pointing out that any tax underpaid through their existing tax code will still be collected.
How to calculate the taxable benefit amount
Work out the taxable value of the benefit, then split it equally across the pay periods in the tax year. Each period’s amount is treated as a notional payment: it’s taxed, but employees don’t pay National Insurance on it.
Here’s an example. Imagine one of your employees is paid monthly, and you payroll a benefit worth £960. That means £80 (£960 ÷ 12) goes through payroll each month and is taxed accordingly.
From April 2027, you’ll also pay employer Class 1A National Insurance on payrolled benefits each month, instead of once a year on your P11D(b). This works well for spreading the cost, but be aware that July 2027 brings your final P11D(b) payment for 2026/27 at the same time.
Until April 2027, you can choose which benefits to payroll and for which employees. After that, phase one benefits must be payrolled for everyone who receives them, with most others following in April 2028. It’s easy for this to get confusing, so it’s worth speaking to a payroll professional.
How to cancel your registration
Your registration carries on unless you cancel it. To stop payrolling voluntary benefits, tell HMRC before the start of the tax year using the online service for payrolling employees’ taxable benefits and expenses. For 2027/28, the deadline is 5 April 2027.
If the tax year has already started, you’ll need to keep payrolling until the end of it, deducting tax each payday and reporting it to HMRC. And remember, you can’t cancel payrolling for phase one benefits once they become mandatory.
How can Cintra help
At Cintra, we have a team of specialists experienced in payrolling benefits.
Whatever your question, we’re happy to help you find a solution that works for your organisation. If you’d like to see how it all works, book a personalised demo with our team!
Sign up for Cintra's Payrolling Benefits service
P11Ds giving you a headache? By April 2027, you’ll need to have made the switch to payrolling benefits, so why not get ahead of the curve? Register to payroll benefits now.
