Don’t let the delay in payrolling Benefits in Kind (BIK) lull you into a false sense of security.
You may have until 2027 before you need to start payrolling BIK, but it is essential to be prepared ahead of time.
Although the changes are not mandatory until 2027, signing up for the voluntary payrolling of BIK allows you to build confidence and identify any potential issues before the deadline.
HM Revenue and Customs (HMRC) will be busy as the deadline approaches.
If you need help, it is better to find out now.
Our expert team is on hand to guide you through the process of becoming compliant with the changes to payrolling Benefits in Kind.
It may be necessary to change the way that benefits are tracked and recorded by your business so that they can be compatible with the new system imposed by HMRC.
We have produced a detailed guide to help you navigate this process, ensuring compliance with the upcoming changes and any future developments.
We also have some handy FAQs below.
FAQs
Currently, benefits such as company cars, medical insurance and others are documented in the annual P11D form, and their related National Insurance Contributions (NICs) are paid in one lump sum after each tax year.
The new system will see a monthly reporting of benefits as part of standard payroll.
Tax and NICs will be paid monthly as they are with salaries.
An annual summary of all payroll benefits will be issued by 1 June following the tax year to employees.
Voluntary registration is available now.
The mandatory start date is 6 April 2027.
More guidance will be released by the end of the year with details on the software released in December 2025.
You will need to re-register before 5 April 2027.
The voluntary payrolling of BIK has been around since 2016, so re-registering ensures all businesses are up to date.
It is important to put a monetary value on all benefits.
This allows for easier determination of tax and NICs.
As with other information pertaining to payroll, it is important to include BIK considerations on payslips.
This is alongside the annual statement issued by 1 June following each tax year.
Being transparent with employees helps them understand the implications of the benefits they receive.
To an extent, you can expect some cash flow issues to come with the changes.
The change from an annual payment to a monthly one increases the burden on tax and NICs each month.
However, the payments should be more manageable as they are spread throughout the year rather than being gathered in one annual payment.
Although HMRC are understanding during the initial change, there will be penalties eventually.
Preparing ahead of time can ensure that you are ready for the changes when they happen.
Take the time now to familiarise yourself with the rules so that you can stay compliant when they become mandatory.
For a more detailed breakdown of the changes to payrolling Benefits in Kind, download our helpful guide.