A Written Ministerial Statement was made recently by James Murray, the Exchequer Secretary to the Treasury. This contained 39 measures, but included the announcement of a delay to the mandatory payrolling of benefits in kind.

An earlier announcement had stated that the year ending 5th April 2026 would be the last year HMRC accepts P11Ds for most benefits. This change has now been deferred for a further twelve months, and the mandatory payrolling of benefits in kind will now be effective from 5th April 2027.

Payrolling benefits is a way to report and tax employee benefits through the payroll system, rather than submitting them at the end of the tax year via form P11D. Currently, employers can voluntarily choose to payroll benefits.

Why delay the change?

Delaying the introduction of mandatory payrolling of benefits has been communicated as a way to give employers more time to prepare. In addition, HMRC says it will work to make sure that the new requirements are easy for employers to implement.

Our view…

Given that the preparation of P11Ds for what was due to be the last time under the old process should be well underway by now, this announcement is a little late!

We’ve been communicating the forthcoming change for some time, and, as part of the collection of information for this year have been reminding clients that they need to make the changes and many now have.

For this announcement to have had any positive benefit in reducing the administrative burden for businesses, it should have come some months ago.

So what now?

Our recommendation would be to continue to move towards payrolling any benefits you provide.

The move will need to be made, and it’s just the deadline that has moved by twelve months. Most employers are already in the process of making the change to payrolling benefits in kind, so it seems pointless to shift back to the old methods. Making the move now allows you to familiarise yourself with the new process without the pressure of mandatory compliance.

You can see more about benefits in kind and the items that need to be reported in this post.

As always, if you have any questions about payrolling benefits or what is classed as a benefit in kind, please get in touch. Though we don’t process payrolls, we do prepare P11Ds, and will continue to prepare P11D(b)s for clients in future, which will still be required once the shift to payrolling benefits in kind has been completed.