Benefits in Kind Are Moving Into Payroll: Agriculture

Is Your Farm Ready?

Vehicles, fuel, medical cover and staff accommodation are part of everyday working life for many farming businesses. They can also create benefits-in-kind obligations—and the way some of those benefits are reported is about to change. From 6 April 2027, employers will have to process certain benefits through payroll in real time instead of relying on year-end P11D reporting. With varied workforces and benefits that are not always straightforward to value, farms should begin preparing now.

What Is Changing?

Payrolling a benefit means adding its taxable value to the payroll calculation so that the employee pays the tax during the year. This should make deductions easier to understand and reduce later tax-code adjustments. For employers, it promises a more streamlined year-end process.

Dates for Your Diary

• • From 6 April 2027:

Mandatory payrolling will cover company cars, car fuel, vans, van fuel and employer-provided medical benefits.

• • From 6 April 2028:

It will extend to most other benefits in kind.

• • Loans and Accommodation:

These will remain voluntary for now, with any future mandatory treatment to be confirmed.

Why Farming Businesses Need to Pay Attention

Farming businesses often provide a wider and more varied mix of benefits than other employers. Classification and valuation are therefore critical. A vehicle’s status can materially affect the tax due and not every instance of farm accommodation creates a taxable benefit.

Seasonal and Overseas Workers

Short-term and fluctuating workforces add another layer of complexity. Accommodation, meals and transport provided to seasonal, overseas or harvest workers must be reviewed carefully.

Family-Run Businesses and Private Use

In family partnerships and family-owned companies, the line between business and personal use can be easy to blur. Benefits provided to directors or family members who are employees— including vehicles, accommodation, utilities and private use of equipment—should be identified, documented and valued consistently.

What Could the Change Mean for Your Business?

Done correctly, payrolling can mean fewer year-end forms, fewer unexpected tax bills for employees and clearer payslips. The challenge is getting there. Payroll software must be ready, benefit values must be correct, and information must reach payroll providers on time. Employees will also need a clear explanation of why their tax codes or take-home pay may look different.

The Takeaway

The message for farming employers is simple: do not leave this until the end of the 2026/27 tax year. An early review will give you time to resolve awkward valuation questions, close gaps between benefits and payroll records, test your systems and communicate confidently with employees. A little preparation now could prevent a difficult transition later.

Get In Touch

For more information or advice on how we can help you with your Payroll, get in touch with your usual Whitings contact or your local Whitings office today.