News

Mandatory payrolling of Benefits in Kind delayed by HMRC
25 June 2025

The delay to payrolling Benefits in Kind (BIK) to 2027 may seem like a cause of relief for many businesses who are concerned about the extra responsibility the changes will bring, but employers should still prepare for this landmark change.

Rather than filing an annual P11D form, the changes to payrolling BIK will force businesses to complete additional admin every month.

Though the 2027 deadline may seem far off, it is worth preparing now, as the deadline is unlikely to be extended again.

What are the changes to payrolling Benefits in Kind?

The main change is the transition from an annual filing to a monthly one.

As BIK will form part of the monthly payroll, it will be subject to the same monthly tax and National Insurance Contributions (NIC) as other employee expenses.

This could impact the cash flow of unprepared businesses.

The more regular payments could reduce working capital in the short term, as monthly expenses increase.

Over time, the smaller, more regular payments should allow for better cash flow management, as the expenses associated with BIK can be managed throughout the year.

Be aware that even with this change, there is still a need to produce an annual summary of BIK, and this must be ready for 1 June.

This dual reporting increases the administrative load for businesses, who will have to endure monthly filings, as well as the compilation of an annual report.

How to prepare for the changes to Benefits in Kind

Updating your benefits policy early is advisable, as you can figure out any issues before the deadline.

While payrolling BIK is still voluntary, it is worth becoming an early adopter so that you can adjust your business operations and ensure compliance before the 2027 deadline.

Getting used to that additional burden of having to incorporate BIK into your monthly payroll may take some time, so giving yourself that opportunity to perfect the system before there is a threat of penalties is wise.

At the very least, beginning to track benefits monthly can lay the groundwork for transitioning to payrolling BIK and will help you file your final P11D in 2026, making the annual report easier to compile.

If you already payroll BIK, do not forget to re-register before 5 April 2027, as failure to do so will cause you to become noncompliant.

Take the time to get ready for payrolling Benefits in Kind. Speak to us today.