HMRC have announced that the mandatory payrolling of BiKs will be introduced on a phased basis.
In its simplest form, the Mandation of Payrolling of Benefits (MPBiKs) means:
- The P11D will be abolished (mainly);
- The P11D value will be processed via the payroll for the collection of Income Tax; and
- Class 1A National Insurance will be accrued in the payroll system and paid monthly
This is a massive change for payroll, software and bookkeeping professionals, one that ICB has been sceptical of in terms of efficiency.
Therefore, we fully welcome HMRC’s announcement that MPBiKs will be introduced on a phased basis:
- Phase 1 from tax year 2027/28; and
- Phase 2 from tax year 2028/29
Only the following benefits will be in Phase 1:
- Company cars and fuel;
- Company vans and fuel; and
- Private medical (health and dental etc)
HMRC say this phased approach has reduced by 94 the number of new RTI fields required from April 2027. Whilst this is important, for payroll professionals, this has significantly reduced the administration burden. It was this burden that will have led to a breakdown of the initiative to abolish the P11D, with the exception of employer-provided accommodation and beneficial loans.
For Bookkeepers
July’s Wages Wednesday will expand on this phased introduction which ICB welcomes. Whilst there are many questions unanswered, this sensible phased approach may mean that payrolling becomes workable.