If you’re running an owner-managed business, this bit of news might give you a sigh of relief – at least for now.
On 28 April 2025, HMRC confirmed that the mandatory payrolling of benefits-in-kind (such as company cars, private medical insurance and other employee perks) will now be delayed until 06 April 2027. Originally, this change was due to be rolled out in April 2026, but after feedback from businesses and software providers, the timeline has been pushed back by a year.
So, what does this mean for you as a business owner? And what should you do between now and then to avoid a last-minute scramble?
Let’s break it down.
First, what is Payrolling of Benefits?
Right now, if your team gets benefits like company cars or private health insurance, you’re likely reporting them once a year through a P11D form. That’s been the norm for years.
With payrolling, the idea is that these benefits will be reported and taxed in real time through your payroll system, no more separate P11Ds. In theory, it’s simpler and gives your team members more accurate take-home pay, since the tax is spread over the year.
HMRC’s plan is to make this approach compulsory for all employers from 06 April 2027. But you can choose to start doing it voluntarily now and many businesses already have.
Why the Delay?
According to HMRC, the extra year gives employers and payroll software providers more time to get ready. Some businesses raised concerns about the complexity of the change and whether systems were quite there yet, especially for smaller employers who manage payroll in-house or use older software.
So, they’ve hit the pause button to (hopefully) make the rollout smoother for everyone involved.
What This Means for Your Business
If you’re already payrolling benefits, nothing changes. You’re ahead of the game – nice work!
If you’re not, this is a brilliant window of opportunity. You’ve now got two full tax years to plan, prepare and test your systems without the pressure of a looming HMRC deadline.
And let’s be honest, rushing to adapt payroll systems a few weeks before the 2027 deadline is no-one’s idea of fun.
Here’s a Real-Life Example:
Say you provide a company car to one of your team members. Right now, you might be submitting a P11D once a year, then your team member pays a lump of tax after the fact.
When payrolling kicks in, the taxable benefit of that car would be spread across the year. So instead of one big tax bill, the team member’s PAYE tax adjusts each month. Easier for them, smoother for you.
But here’s the kicker, you’ll need payroll software that can handle this properly. And you’ll need to update your internal processes so that new benefits are recorded in real time, not just at year-end.
How GreenStones Can Help
We know that most of our customers want more than just compliance, they want to get ahead of changes and make things work better.
So, if you’re not yet payrolling benefits, we can help you:
- Review your current benefits setup
- Decide whether payrolling now could save you admin headaches
- Update your payroll software (we’re big fans of cloud-based solutions like Xero – check out our blog to see how it can help your business grow)
- Test your systems before the 2027 deadline hits
It’s all about using this delay as a chance to make life easier in the long run, not just putting it off until it becomes urgent.
Need Help? Let’s Chat
If you’re unsure what this change means for your business or would like to get ahead before it becomes mandatory, please give us the GreenStones team a call on 01733 371180. We’ll talk you through your options and help you build a plan that fits your goals and systems.
If you would like to read more about this, please check out the HMRC website.