Last chance to sign up for voluntary payrolling of Benefits in Kind

If your business provides perks such as company cars, private medical cover or other Benefits in Kind (BiKs), there’s an important change coming and a final window to volunteer for an earlier transition.

The familiar year-end P11D process is being phased out in favour of payroll reporting.

The window to voluntarily payroll BiKs is closing soon, so it is worth considering whether you want to adopt it for this tax year.

What is changing with the reporting of BiKs?

From April 2027, most BiKs will need to be reported and taxed through payroll using Real Time Information (RTI) submissions rather than via the P11D at year-end.

A small number of items, notably certain loans and accommodation, remain eligible to be reported on P11D if they are not included in payrolling.

Employers can opt to payroll BiKs voluntarily ahead of the mandatory date, but that must be done before 5 April 2026.

Historically, employers tracked benefits across the tax year and then submitted P11Ds, which triggered retrospective adjustments to employees’ tax codes.

Payrolling moves tax collection into the regular payroll cycle, so tax is deducted as benefits are enjoyed, avoiding large year-end reconciliations.

Why consider voluntary payrolling now?

Adopting payrolling this year gives your payroll and HR teams time to learn the new processes ahead of the compulsory change.

Making the switch early reduces reliance on P11D returns and the subsequent corrections to tax codes that can cause confusion and unexpected tax bills for staff.

For employees, payrolling improves transparency as tax is paid incrementally as benefits are received rather than crystallising as an adjustment after the year end.

How should businesses prepare?

There is limited time before 5 April, but employers can still make a voluntary election for the coming tax year if they act promptly.

You should identify which items you offer and how they’re currently tracked.

Take the time to update payroll systems and workflows so RTI submissions can include the relevant BiK values each pay period.

Communicate with staff so they understand how payrolling changes their tax treatment and timing.

Most importantly, you should not forget to register to payroll BiKs before 5 April 2026, as missing that date means waiting until payrolling becomes mandatory in April 2027.

If you prefer the old P11D routine, this is your last tax year to continue that process.

If you would rather avoid annual P11Ds and the year-end adjustments they bring, take the opportunity to move to payrolling BiKs now.

Our team can review your current BiK arrangements, advise whether voluntary payrolling makes sense for your business and implement the necessary payroll changes.

Whether you choose to opt in this year or prepare for the 2027 mandate, we will support you through the transition.