HMRC has confirmed a new step in its payroll reform plans. In an update on 15 October 2026, it announced that UK employers will be able to register for voluntary payrolling of Benefits in Kind from November 2026. The registration will cover the 2027–28 tax year.
The service is not open yet. But employers now have clear dates to plan for before the first mandatory rules start on 6 April 2027.
What Is Voluntary Payrolling of Benefits in Kind?
Benefits in Kind are perks that staff get on top of their normal pay. These may include a company car or private medical cover.
Payrolling means that tax on these perks is dealt with through an employee’s regular pay, rather than only through year-end forms.
Under HMRC’s new plan, more benefits will move to this system in stages.
Which Benefits Will Be Mandatory from April 2027?
From 6 April 2027, employers must pay payroll for company cars, car fuel, vans, van fuel and employer-provided medical benefits. They will not need to register for these mandatory items.
From 6 April 2028, most other taxable benefits are due to join the system. Employment-related loans and living accommodation will stay outside the mandatory rules and can be payrolled by choice.
When Can Employers Register for Voluntary Payrolling?
HMRC plans to reopen its online registration service in November 2026. Employers who want to payroll non-mandatory benefits in 2027–28 must sign up by 5 April 2027.
Those who already use voluntary payrolling will stay enrolled for that tax year. They must withdraw by 5 April 2027 if they want to stop.
This deadline does not apply to benefits that become mandatory.
How Will Class 1A National Insurance Change?
From 6 April 2027, employers who choose to payroll non-mandatory benefits must also report and pay the related Class 1A National Insurance through payroll.
They cannot collect the Income Tax through payroll and leave the Class 1A charge for the year-end process.
For mandatory benefits, employers will report details through Full Payment Submissions (FPS). This is part of HMRC’s Real Time Information (RTI) system.
The voluntary service will not use all the same new FPS fields.
Why Could Employers Face Cash Flow Pressure in 2027–28?
HMRC has warned about a one-off overlap.
Employers may pay Class 1A charges for 2026–27 in July 2027, while also paying them through payroll for benefits given in 2027–28.
This is not the same bill charged twice. But payments for two tax years could fall close together, so firms should plan the cash they need.
What Happens If Employers Are Not Ready?
Businesses that fail to prepare may face payroll errors, missed reports or late payments.
Some P11D and P11D(b) forms will still be needed, including for eligible globally mobile employees using HMRC’s planned exclusion process.
HMRC has announced limited relief for non-deliberate reporting errors during 2027–28, but late filing and payment penalties may still apply.
What Should UK Employers Do Now?
Employers should check which benefits their staff receive and ask payroll providers whether their software will support the new reports.
They should also review their cash budgets and explain any changes in take-home pay to staff.
HMRC’s guidance, updated on 23 September 2026, remains interim. Further updates are expected around Autumn Budget 2026.
How Can Lanop Help Employers Get Ready for HMRC’s New Payrolling Rules?
From April 2027, employers must report Benefits in Kind through payroll. Class 1A National Insurance will also be paid in a new way. Employers need to know which benefits are covered. They need to decide if voluntary registration is right for them. They also need to see how the change may affect payroll costs.
LANOP Business & Tax Advisors can help you check the Benefits in Kind you give today. We can explain the new HMRC reporting rules. We can also help you get ready to pay Class 1A in real time. Our payroll and tax advisers can help you plan for the cash-flow overlap in 2027–28. They can also check your payroll set-up before the new rules start.
Voluntary registration opens in November 2026. The final deadline is 5 April 2027. Acting early can help you avoid reporting errors and manage your payments. It also keeps you in line with HMRC.
