Mandatory Payrolling of Benefits from 2026

3rd April 2024

In 2016 the Government launched a trial scheme to payroll benefits. The purpose of this was to make declaring and paying tax on benefits easier in comparison to submitting annual P11D forms and also to provide HMRC with real time information.

Due to the regulations HMRC put in place at the time, it’s fairly safe to say the launch of the scheme was not a great success with very little take up amongst existing PAYE schemes. In the intervening years, the restrictions as to what could and could not be payrolled, coupled with de-regulation, has seen an uptake in the number of businesses participating in the scheme.

Currently, the only benefits that cannot be payrolled are beneficial loans (interest free or low interest loans) and employer provided accommodation and these still require P11D’s. However, from April 2026 HMRC has announced the mandatory payrolling of all benefits. The mandation is expected to simplify the tax affairs of over three million people and, at the same time, significantly reduce the administrative burden for thousands of employers.

Registering to payroll benefits

Registering to payroll benefits for the 2024-25 tax year needs to be completed before 6 April 2024 via the employer’s Government Gateway. You cannot register to payroll benefits for the 2024-25 tax year once the tax year has started, so registering post 6 April 2024, will be for the 2025-26 tax year.