As we approach the mandatory payrolling of benefits in kind (MPBiKs) from April 2027, HMRC have made significant updates to their interim guidance.
When HMRC published their ‘interim guidance’ on MPBiKs, we always understood this was incomplete and would be updated from time to time. On 09 November 2026, they have made significant updates and ICB points you to the updated and new sections:
- Reporting requirements – where details have been added about the scope of medical benefits that have to be reported;
- Getting ready for mandatory payrolling of benefits in kind – where a sample letter has been produced for employers to adapt for employees. There is also guidance on the ‘annual payrolled benefits statement’ that employers are required to provide employees;
- How to report a benefit in kind in real time – where details have been added about making taxable value reasonable estimates and reporting when the employee makes good;
- If the full amount of tax cannot be collected within a pay period or tax year – which details that some information in this section has been moved to a new one, detailed below;
- Dealing with employees who leave during the tax year – which details that information about in year corrections, and benefits and expenses which could not be accounted for during the year have been moved to the section 'Corrections and adjustments' (below);
- Common payrolling scenarios – this is the new section which, amongst other scenarios, contains the confirmation that employees / directors in receipt of benefits but are not on the payroll must be put on the payroll from April 2027;
- Reporting Class 1A National Insurance contributions – which details how some information has been moved to other sections and contains details of the Class 1A rounding rules from April 2027 on payrolled benefits;
- Third party benefit providers – this is a new section which contains information for the providers of benefits, for example medical and dental benefit. This is vital information if payroll is to process information in real-time;
- Termination payments – this is a new section that confirms benefits provided as part of a termination payment do not have to be payrolled and are out of scope of mandatory payrolling;
- Penalties and interest – this has been updated to confirm that no penalties will apply in the first year of payrolling for errors, though penalties and interest will apply for late submissions;
- Corrections and adjustments – this has been updated to remove the section on end of tax year corrections and adjustments and refers now to previous tax year corrections and adjustments;
- Mergers and acquisitions – which points to other guidance on Gov.UK;
- If you stop trading – a new section which says that payrolling needs to continue if they are part of mandation or the employer has voluntarily elected to payroll them;
The guidance now has 5 annex sections and ICB suggests that annex 1 ‘payrolling examples for different scenarios’ is the most relevant.
For Bookkeepers
This HMRC publication is extensive guidance that, perhaps, is only published now because of legislation to be contained in Finance Bill 2027. ICB suggests members communicate with their software providers on how their product will support payrolling.
In particular, the legal obligation to provide employees with a statement of payrolled benefits by 01 June annually. This obligation is more important upon mandation and there are two communication exercises for employers, contained in Gov.UK guidance:
1. Ahead of year 1, advise employees how payrolling will work; and
2. At the end of every tax year, advise employees which benefits have been payrolled and the ones that have not been (which will be declared via the P11D before it is abolished and all benefits must go through the payroll)
With regard help your software provider can give, this will always be limited by functionality and, of course, the accuracy of the data entered.