Payrolling benefits took a step closer with the publication of draft legislation for Finance Bill 2026/27.
On 15 June 2026, HMRC announced a phased implementation of MPBiKs (the Mandatory Payrolling of Benefits in Kind). This will be phased as follows:
Phase 1 (from April 2027)
1. Company cars and fuel;
2. Company vans and fuel; and
3. Private medical (health and dental etc)
Phase 2 (from April 2022)
Everything else.
Neither phase will include employer-provided accommodation and beneficial loans, though these can be payrolled on a voluntary basis.
On 13 July 2026, HMRC published a Policy Paper and draft legislation to support Phase 1. Together, these do three things:
1. Confirms the benefits included in Phase 1;
2. Confirms penalties for ‘non-deliberate inaccuracies’ will not apply in tax year 2027/28; and
3. Changes the rules regarding valuation of a classic car. Currently, and up to April 2027, to be taxed as a classic car, the car must by 15 years or older at the end of the tax year with a market of value of £15,000. The change, from April 2027, will allow the 15-year and valuation rules to apply from the start of the tax year
The Policy Paper contains the line:
‘This measure is expected to have a significant administrative impact on around 280,000 employers who currently report benefits in kind through end-of-year processes’.
For Bookkeepers
The monthly Wages Wednesday webinars have been open and honest in that payrolling will be a massive administration burden on employers, especially bookkeepers who provide payroll as a service. Now, HMRC have acknowledged this in their July 2026 Policy Paper.
Of course, the scale of the burden depends on the number of benefits that need to be payrolled, something forthcoming Wages Wednesdays will focus on without doubt.
Payrolling is coming and ICB recommends members talk with their clients as soon as possible.