In simple terms
Status: HMRC interim guidanceFrom 6 April 2027, tax on company cars, car fuel, vans, van fuel and employer-provided medical benefits is expected to be handled through payroll. For now, identify who receives these benefits, check your records and ask your payroll provider when it will be ready. HMRC is still finalising some of the detailed rules.
Start here
Three things to do first
Check whether you are affected
See which benefits are due to move into payroll and make a list of the employees who receive them.
Gather your benefit data
Bring together costs, vehicle details, start and end dates, and anything employees pay towards a benefit.
Prepare your employees
Explain the change before April so employees understand why a benefit appears on their payslip.
What is changing?
Five benefit types are expected to move into payroll first
Company cars, car fuel, vans, van fuel and employer-provided medical benefits are named in HMRC’s first phase from 6 April 2027. Employees will pay the tax during the year, while the benefit itself remains non-cash and must not be added to net pay.
View the full timetable and current HMRC status
| Benefit or item | From 6 April 2027 | From April 2028 | Current status |
|---|---|---|---|
| Company cars | First phase | Continues | Interim HMRC guidance |
| Car fuel | First phase | Continues | Interim HMRC guidance |
| Vans | First phase | Continues | Interim HMRC guidance |
| Van fuel | First phase | Continues | Interim HMRC guidance |
| Employer-provided medical benefits | First phase | Continues | Interim HMRC guidance |
| Most other Benefits in Kind | Not in the named five-category list | Planned expansion | Interim guidance |
| Taxable expenses | Referenced in current HMRC guidance | Awaiting confirmed scope | Final clarification needed |
Free Workmax tools
Take the next step without reading all the rules
Start with the job you need to do. Each tool gives you a useful result without asking you to sign up.
Check if your business is ready
Answer a few simple questions and get a practical plan for the gaps you need to close.
Check my readinessEstimate a payrolled benefit
See how a benefit could be spread through payroll and what it may mean for employer Class 1A.
Use the BiK calculatorExplain the change to employees
Create a calm, plain-English notice you can adapt and share before the first affected payslip.
Create an employee noticeYour transition plan
A clear route to your first 2027/28 payroll
You do not need to solve everything today. Work through these four stages in order and bring your payroll provider into the process early.
- Now1. Identify benefitsList the affected benefits and employees.
- Preparation2. Gather the dataCheck costs, dates, vehicle details and contributions.
- Before April3. Test with payrollConfirm software readiness and resolve missing information.
- 6 April 20274. Start and checkExplain payslips, reconcile values and correct changes quickly.
Plain-English guides
Choose the question you need answered
Skip straight to the situation that applies to you. Each guide starts with a short answer before offering more detail.
What employers need to do about payrolled benefits from April 2027
A straightforward guide to who is affected, what will change and the practical steps to take before April 2027.
Read the simple guideP11D changeWhat changes when benefits move from P11Ds into payroll?
See the practical difference between the familiar P11D process and payrolling benefits during the year.
Read the simple guideEmployeesWhat will employees notice when benefits appear in payroll?
A plain-English explanation of payslips, take-home pay and what employers should tell their teams.
Read the simple guideCompany carsHow to get company-car records ready for April 2027
Find out what information to collect, where to find it and what to do when an employee changes car.
Read the simple guideEmployer costsWhat employers need to know about Class 1A from April 2027
A plain-English guide to the employer cost and the one-off cash-flow overlap in 2027.
Read the simple guideBenefit dataThe benefit information to gather before April 2027
Turn scattered invoices, fleet records and spreadsheets into a simple payroll-ready list.
Read the simple guideShow six more practical guides
A simple guide to calculating company-car tax
See the basic calculation and the car or employee details that can change the answer.
Read the simple guideMedical coverHow to prepare private medical benefits for payroll
A practical guide to the costs, dates and employee payments you need before April 2027.
Read the simple guideVansDo your company vans need to go through payroll?
Work out what to check for company vans, private use and employer-paid fuel.
Read the simple guideCar fuelWhen does employer-paid car fuel become taxable?
Understand private fuel, employee repayments and what to record when fuel stops.
Read the simple guideEmployee noticeHow to explain payrolled benefits to employees
Give employees a calm, clear explanation before their first affected payslip.
Read the simple guideCorrectionsWhat to do when benefit information is late or wrong
Correct a cost, date or vehicle change without deleting the original payroll history.
Read the simple guideKey questions
The important April 2027 answers in one place
The short answer is always visible. Open the official detail only when you need the source or the current HMRC status.
What Benefits in Kind must be payrolled from 6 April 2027?
Status: HMRC interim guidanceFrom 6 April 2027, HMRC says employers will need to put company cars, car fuel, vans, van fuel and employer-provided medical benefits through payroll.
Read the full answer and official source
These are the first five benefit groups in the change. HMRC currently plans to add most other Benefits in Kind from April 2028, while loans and accommodation will continue to have separate arrangements.
Source: HM Revenue and Customs — The phased introduction of mandatory payrolling for benefits in kind
Source updated: . Workmax reviewed: .
Are taxable expenses included from 6 April 2027?
Status: HMRC interim guidanceFrom 6 April 2027, HMRC also expects taxable expenses to move into payroll, but the exact scope is not yet final. Employers should identify these expenses now and wait for confirmed rules before changing payroll.
Read the full answer and official source
Different expenses can have different tax treatment. Make a list of what you reimburse or provide, but do not assume every expense will follow the same process.
Source: HM Revenue and Customs — The default operation of mandatory payrolling
Source updated: . Workmax reviewed: .
How will Class 1A National Insurance contributions work from April 2027?
Status: HMRC interim guidanceHMRC’s current plan is for employers to report and pay Class 1A National Insurance on affected benefits through payroll from April 2027. Class 1A is an employer cost, not an employee deduction.
Read the full answer and official source
Employers should budget for a possible overlap in 2027: the final annual payment for 2026/27 may fall due while the new in-year process has already started.
Source: HM Revenue and Customs — Reporting Class 1A National Insurance contributions
Source updated: . Workmax reviewed: .
What information will employers report through FPS?
Status: Draft HMRC technical specificationHMRC has published a draft list of benefit information that payroll software may need to send. Employers can start gathering the information, but the final list may still change.
Read the full answer and official source
The draft includes benefit values, employer Class 1A amounts and extra details for particular benefits. Company cars need the most information, including vehicle and availability details.
Source updated: . Workmax reviewed: .
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: .
Reference, if you need it
Process comparisons, definitions and official updates
These sections are useful for checking a detail. You do not need to read them before using the tools or starting your transition plan.
What changes from the P11D process?
The main change is timing: benefit information needs to reach payroll during the year, rather than being dealt with mainly after the tax year ends.
| Area | Predominantly annual process | Mandatory payrolling |
|---|---|---|
| Timing | Benefit reported after year end | Information reaches each relevant payroll |
| Employee tax | Often collected through a later tax-code adjustment | Collected during the year through PAYE |
| Class 1A | Annual reporting and payment | Current HMRC design moves this into real-time reporting |
| Corrections | Year-end review may reveal errors | Changes are recalculated and reconciled during the year |
Plain-English 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.
- Amount forgone
- Cash pay given up by an employee in exchange for a benefit under an optional remuneration arrangement.
- OpRA
- An optional remuneration arrangement in which an employee gives up cash pay for a benefit.
Latest regulatory updates
Workmax reviewed the current HMRC phase and technical material. The public tools continue to show provisional labels where the rules are not final.
HMRC updated its interim guidance. Workmax separated the five named first-phase benefits from the taxable-expense scope that still needs clarification.
- Autumn 2026 expected
Further legislation and guidance are expected. Workmax will recheck calculations, reporting fields and public explanations when they are published.
How Workmax checks regulatory information
HMRC and legislation remain the authority for legal requirements. Workmax links to specific official sources, labels draft and illustrative material beside the relevant claim, and changes review dates only after a substantive check.
Explore the current benefit reporting fields
