Payrolling benefits voluntarily in 2027/28

Mandatory payrolling is now being introduced in stages. From 6 April 2027 onwards, employers will be required to payroll:

• company cars;

• car fuel;

• vans;

• van fuel; and

• medical benefits.

For 2027/28, employers can opt to payroll all other benefits voluntarily, including taxable cheap employment-related loans and living accommodation benefits which cannot currently be payrolled. However, non-mandatory benefits can only be payrolled in 2027/28 if they have been registered for payrolling.

New service

The service previously used to register benefits in kind for payrolling has been closed down. It is to be replaced with a new service which is to be launched in November 2026. From that date, employers will be able to register benefits for voluntary payrolling from 6 April 2027. Where benefits are not registered for voluntary payrolling in 2027/28, the employer will continue to report them to HMRC after the year end on the employee’s P11D. To voluntarily payroll benefits in 2027/28, they must be registered before the start of the 2027/28 tax year.

2028/29

From 6 April 2028, all remaining benefits with the exception of taxable cheap employment-related loans and living accommodation benefits will be brought within mandatory payrolling.

The only benefits for which payrolling is voluntary in 2028/29 are employment-related loans and living accommodation benefits. Employers will be able to payroll these voluntarily if they have registered them for payrolling using the new service.