Payroll Hub · Simple employer guide
How to explain payrolled benefits to employees
Give employees a calm, clear explanation before their first affected payslip.
Best for: Business owners and people working in payroll, finance or HR
- Plain-English guide
- Reviewed 11 August 2026
In simple terms
Status: HMRC interim guidanceBefore April 2027, tell employees which benefit is affected, when the change starts and that the benefit is not extra cash pay. Explain that tax will be collected sooner and their take-home pay may change. Give them a named contact so they can query an incorrect car, cost or start date before payroll is finalised.
When should employees be told?
Send the first explanation early enough for employees to check their details, then send a short reminder before the first affected payslip. Avoid waiting until someone notices an unexpected change in take-home pay.
Why might an employee think they are paying twice?
Their tax code may still be collecting tax relating to a benefit from an earlier year while payroll starts collecting tax for the current year. Explain that these relate to different periods and tell the employee where to ask for help.
Optional detail
Official guidance behind this answer
The short answers above are enough to get started. Open these sections only if you need to check the current HMRC position or source.
What should employers tell employees before April 2027?
Status: HMRC interim guidanceBefore April 2027, tell affected employees that tax on their benefit will be collected through payroll and that the benefit is not extra salary or cash pay.
Read the full answer and official source
Name the benefit, explain what may appear on the payslip and give the employee a clear contact if the cost, vehicle or dates look wrong. Some employees may also have older benefit tax being collected through their tax code.
Source: HM Revenue and Customs — Getting ready for mandatory payrolling of benefits in kind
Source updated: . Workmax reviewed: .
Plain-English Benefits in Kind glossary
- Benefit in Kind (BiK)
- A non-cash benefit or expense provided by an employer that may create an Income Tax liability.
- Payrolling benefits
- Including a benefit's taxable value in payroll so Income Tax is collected through PAYE.
- Cash equivalent
- The statutory taxable value of a benefit, which may differ from its purchase price or cash cost.
- Class 1A NIC
- An employer National Insurance liability charged on many taxable benefits and expenses.
- P11D
- The end-of-year form traditionally used to report taxable expenses and benefits for an employee.
- FPS
- The Full Payment Submission employers send through Real Time Information when payroll is reported to HMRC.
