Benefits in Kind are changing: what employers need to know
Company cars, private medical cover and other perks come with tax implications, and the way they are reported to HMRC is changing.
Tracey Keyse, Head of Practice.
What is a Benefit in Kind?
A Benefit in Kind (BiK) is a benefit provided to an employee or director beyond their normal salary or wages. Common examples include company cars and fuel, private medical insurance, gym memberships and other non-cash perks. These benefits may trigger Income Tax liabilities for employees and Class 1A National Insurance responsibilities for employers.
How benefits are reported today
Employers have traditionally reported Benefits in Kind after the tax year ends, using forms P11D and P11D(b). Some employers already choose to payroll certain benefits voluntarily, collecting the tax through regular payroll rather than through year-end adjustments.
Changes from 6 April 2027
From April 2027, HMRC will require real-time payroll reporting for company cars, car fuel, vans, van fuel and employer-provided medical benefits. Rather than reporting at the year end, employers must calculate and report the taxable amounts through payroll software as part of Real Time Information (RTI).
Further changes from April 2028
Most other Benefits in Kind will then move to mandatory payrolling. Employer-provided loans and accommodation will follow later, with separate guidance.
What employers should do now
- Identify which benefits you currently provide.
- Review how you report them today.
- Check that your payroll software can handle payrolled benefits.
- Keep accurate records of every employee benefit.
- Prepare the payroll calculation process.
- Tell employees what is changing and when.
Why this matters
Getting it wrong can mean unexpected tax liabilities, incorrect PAYE deductions, additional National Insurance bills, reporting errors and unnecessary corrections. Preparing early gives you time to close any gaps in your process before the requirements become mandatory.
