Benefits in kind go through payroll from 6 April 2027.
From the 2027 to 2028 tax year, employers have to report company cars, car fuel, vans, van fuel and private medical benefits through payroll. Their value is taxed in each pay run, and the employer's Class 1A National Insurance is reported and paid in real time, instead of on a P11D and P11D(b) after the year ends. Most other benefits follow from April 2028.
What changes on 6 April 2027
Today most employers report benefits in kind after the tax year on a P11D for each employee, pay the employer's Class 1A National Insurance once a year with the P11D(b), and HMRC collects the employee's tax through their tax code. From 6 April 2027 that changes for the most common benefits.
| Benefit | 2027 to 2028 | From 6 April 2028 |
|---|---|---|
| Company cars and car fuel | Payrolled | Payrolled |
| Vans and van fuel | Payrolled | Payrolled |
| Private medical treatment or insurance | Payrolled | Payrolled |
| Most other benefits and taxable expenses | P11D, or payrolled if you registered by 5 April 2027 | Payrolled |
| Employment-related loans and living accommodation | P11D, or payrolled if you registered by 5 April 2027 | Never required: P11D, or payroll them voluntarily |
Private medical includes medical and dental insurance, and cash and health plans that pay towards medical or dental costs. Class 1A National Insurance on payrolled benefits is reported on each Full Payment Submission (FPS) and paid through payroll in real time. In 2027 to 2028 there's a one-off overlap: the Class 1A for 2026 to 2027 is still due on the P11D(b) as usual, in the same year as the new in-year payments.
How a payrolled benefit is worked out
Start with the benefit's cash equivalent for the tax year: the same taxable value a P11D would show. Divide it by the number of times the employee is paid in the tax year and round down to the penny. That amount is added to their taxable pay each pay period.
| Paid monthly | Paid weekly | |
|---|---|---|
| Car benefit for 2027 to 2028 | £2,100.00 | £2,100.00 |
| Pay periods in the year | 12 | 52 |
| Added to taxable pay each pay period | £175.00 | £40.38 |
Class 1A National Insurance is worked out on each employee's payrolled benefits every pay period, rounded once on their total rather than benefit by benefit. If a benefit's value changes during the year, for example a new car, take what has already been payrolled for it from the revised value and spread the rest over the pay periods left.
When the tax is more than half the employee's pay
The tax taken in a pay period can't be more than 50% of the employee's pay for that period. Anything above the limit is carried forward to the next pay period where possible. Whatever is still owed at the end of the tax year is collected by HMRC afterwards, through a P800 tax calculation or Simple Assessment.
Five things to do before April 2027
List every benefit
Each employee's cars, vans, fuel and medical cover, with what HMRC asks for: for a car, its make and model, first registration date, CO2 emissions, fuel type, list price and the dates it's available.
Decide on other benefits
To payroll other benefits in 2027 to 2028, such as vouchers or gym memberships, register with HMRC by 5 April 2027. Otherwise they stay on the P11D for one more year.
Check for exceptions
Eligible globally mobile employees can be excepted from payrolling. Ask HMRC for the exception, which it recommends doing by 5 April 2027; their benefits stay on the P11D.
Tell your employees
Their payslips will show the benefits, and the tax taken each pay period will change. After each tax year, give them a written statement of the benefits payrolled, by 1 June.
Check your payroll software
It has to send each benefit's details on the FPS from 6 April 2027, along with the Class 1A for each pay period.
Benefits in kind in Clients Assistant
Each employee's record has a Benefits tab for 2027 to 2028: company cars with every detail the FPS asks for, free car fuel, vans and van fuel, private medical and other benefits by their P11D section. Payroll Settings keeps your voluntary registration with HMRC and any globally mobile exceptions, and lists, for each employee, anything missing before their benefits can be payrolled.
Working out each benefit's amount for the pay period, taxing it in the pay run, the Class 1A and the FPS's benefit details are being added for the first pay runs of 2027 to 2028.
Payroll is £6 + VAT a month including 5 employees, then £1.50 + VAT a month for each extra employee paid. Payroll + HR is £12 + VAT a month including 5 employees, then £2.50 + VAT a month for each extra one. Up to 2 employees paid in a month is free.
Questions people ask
Company cars, car fuel, vans, van fuel and private medical treatment or insurance, from 6 April 2027. Most other benefits in kind and taxable expenses must be payrolled from 6 April 2028.
No. Employment-related loans and living accommodation don't have to be payrolled, in 2027 or after. You can choose to payroll them by registering with HMRC before the tax year starts.
Not for the benefits you payroll. P11Ds and the P11D(b) are still needed for benefits that aren't payrolled, such as other benefits in 2027 to 2028 you didn't register, and for employees HMRC has agreed an exception for. Employees get a copy of their P11D by 6 July after the tax year.
With HMRC's online service for payrolling benefits, by 5 April 2027. Registration has to be done before the tax year starts: after that, those benefits stay on the P11D for 2027 to 2028.
From 6 April 2027 you don't send P46(Car) forms. Company car details go to HMRC on the FPS with each pay run instead.
Divide the benefit's cash equivalent for the tax year by the number of times the employee is paid in the year, and round down to the penny. A £2,100 car benefit adds £175 a month to a monthly-paid employee's taxable pay.
The tax taken in a pay period can't be more than 50% of their pay for it. The rest is carried forward to the next pay period where possible, and anything still owed at the end of the year is collected by HMRC afterwards.
A written statement of the benefits that went through payroll, by 1 June after the tax year ends. It only needs to cover payrolled benefits.
Yes. Each employee's Benefits tab takes their cars, fuel, vans, medical and other benefits for 2027 to 2028, and Payroll Settings keeps your voluntary registration and exceptions. Payrolling them in the pay run and on the FPS is being added for the first pay runs of 2027 to 2028.
Checked against GOV.UK on 10 November 2026. Sources: Prepare for mandatory payrolling of benefits in kind; Draft guidance and legislation for reporting benefits in kind in real time; Getting ready for mandatory payrolling of benefits in kind; How to report a benefit in kind in real time; If the full amount of tax cannot be collected within a pay period or tax year.
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