Key takeaway: From 6 April 2027, employers must report company cars, vans, car and van fuel, and medical benefits through payroll. Income tax is collected each pay period and Class 1A National Insurance is handled in real time, instead of on a P11D after the tax year ends. Most other benefits follow from 6 April 2028. Employment-related loans and living accommodation are excluded for now. HMRC reopens registration for voluntary payrolling on 5 November 2026, so employers can start early.
Mandatory payrolling was originally due in April 2026. The government has phased it in, and Budget 2026 confirmed the new timetable (see our Budget 2026 tax changes guide for the wider picture). This guide explains what changes, who is affected and how to prepare. If you would rather hand payroll to someone else, see our UK payroll service.
The timetable
| Date | What happens |
|---|---|
| 5 November 2026 | Voluntary payrolling registration reopens for 2027/28 |
| 6 April 2027 | Mandatory payrolling for company cars, vans, car fuel, van fuel and medical benefits (including private medical insurance) |
| 6 April 2028 | Most other benefits in kind must be payrolled |
| Not yet scheduled | Employment-related loans and living accommodation stay outside payrolling |
What changes for employers
- Report benefits on the Full Payment Submission. The taxable value of each benefit is added to the employee's pay and reported to HMRC through Real Time Information (RTI) each pay period.
- Collect tax through PAYE. Tax is deducted from pay as the benefit is provided, not through a tax code adjustment.
- Class 1A National Insurance in real time. Employer Class 1A on payrolled benefits is reported and paid through payroll rather than after the tax year.
- Payroll software must be ready. Check that your provider will support the new RTI fields from April 2027 and that car and benefit data reaches payroll on time.
- Process changes. HR, fleet and payroll need to share changes such as new cars, fuel cards and insurance joiners as they happen, not at year end.
What changes for employees
Employees will see the benefit value on their payslip, and their tax code will no longer include a deduction for that benefit. Some employees may see two things at once in the first year: tax on the payrolled benefit, plus a tax code adjustment collecting an earlier underpayment. That is not double taxation, but explain it early to avoid confusion. Tell employees before April 2027 which benefits are moving to payroll.
2027/28 benefit figures
| Charge | 2027/28 |
|---|---|
| Car fuel benefit multiplier | £30,200 |
| Van benefit charge | £4,310 |
| Van fuel benefit charge | £825 |
Source: Budget 2026 OOTLAR. Company car benefit is still worked out from the car's list price and CO2 percentage.
Who is excluded
HMRC estimates that about 235,000 globally mobile employees will be outside mandatory payrolling, broadly those in tax equalisation or similar arrangements where payroll cannot easily report benefits in real time. Check HMRC's interim guidance if you employ internationally mobile staff.
How to prepare
- List every benefit you provide and which phase it falls into (April 2027 or April 2028).
- Confirm with your payroll software provider that it will be ready for April 2027.
- Consider registering for voluntary payrolling from 5 November 2026 so 2027/28 runs smoothly.
- Set up a monthly process for fleet, fuel and medical insurance changes to reach payroll.
- Write to employees explaining the change to their payslips and tax codes.
Frequently asked questions
When does payrolling benefits become mandatory?
From 6 April 2027 for company cars, vans, fuel and medical benefits, and from 6 April 2028 for most other benefits. Employment-related loans and living accommodation are excluded for now.
Do I still need P11D forms?
Benefits that are payrolled are reported through RTI, not on a P11D. Benefits not yet in scope, such as loans and accommodation, still need reporting under the current rules. Follow HMRC's final guidance on year-end forms as it is published.
Can I start payrolling benefits before April 2027?
Yes. HMRC reopens voluntary payrolling registration on 5 November 2026. Starting early gives you a trial run before the change becomes mandatory.
Will employees pay more tax?
The tax on a benefit does not change. What changes is when and how it is collected: each payday through PAYE rather than through a tax code adjustment.
Official sources
- Mandatory reporting of benefits in kind in RTI from April 2027 (tax information and impact note)
- The phased introduction of mandatory payrolling for benefits in kind (HMRC interim guidance)
- Budget 2026: Overview of tax legislation and rates (OOTLAR), HMRC
- Agent Update issue 146, HMRC
This article is general information based on HMRC and HM Treasury publications available on 2 November 2026 and is not personal tax advice. HMRC's guidance is still being finalised and details may change.
