HMRC BiK Payrolling Reforms: Key Changes and What Employers Need to Prepare For

HMRC has released updated guidance on the upcoming reforms to the payrolling of benefits in kind (BiKs), setting out key milestones for employers ahead of the transition to mandatory reporting. CELIA Alliance’s UK founding member firm, Abbiss Cadres LLP, explains what these changes mean in practice and how organisations should prepare.

The key points covered in this article are: 

• Key deadlines for voluntary and mandatory BiK payrolling
• The future treatment of loans and employer-provided accommodation
• How to handle benefits that cannot be accurately valued in real time
• The new BiK “update process” for correcting tax differences
• Practical steps employers should take to prepare systems, payroll, and communications

Key dates for BiK payrolling changes

• Voluntary payrolling for 2026/27: Employers wishing to payroll benefits voluntarily must register by 5 April 2026. Registration cannot be completed once the tax year has begun.
• Closure of current registration system: HMRC will close the existing voluntary payrolling registration service on 6 April 2026.
• Mandatory payrolling from 2027/28: From 6 April 2027, most BiKs will need to be processed through payroll. HMRC has issued updated technical guidance confirming this transition.
• Loans and employer-provided accommodation: These will remain on a voluntary basis for 2027/28. A separate registration process will be introduced ahead of April 2027 for employers choosing to payroll them.

BiKs that cannot be valued during the year

HMRC acknowledges that certain benefits cannot always be accurately valued in real time, including:

• Fuel cards
• Employment-related loans
• Employer-provided accommodation

Where this applies, employers should use reasonable estimates during the year, with final adjustments made through the BiK update process.

The BiK update process

HMRC has introduced a formal mechanism to reconcile discrepancies:

• Used to correct under- or overpaid tax
• All BiKs must be reported by 6 July following the tax year
• Additional tax will be adjusted via P800, Simple Assessment, or Self Assessment
• Class 1A NICs must be paid by 22 July
• Penalties for inaccurate returns will be waived for the 2027/28 transition year

HMRC is expected to provide further clarification on specific scenarios over time.

Practical steps for employers

To prepare for the reforms, employers should consider:

• Planning employee communications around potential changes to net pay
• Reviewing existing loan and accommodation arrangements
• Ensuring payroll systems can support real-time reporting
• Improving data accuracy for benefits provided throughout the year
• Assessing whether payrolling reduces P11D administrative burden

How CELIA Alliance can help

CELIA Alliance’s UK founding member firm, Abbiss Cadres, supports employers in navigating the transition to BiK payrolling compliance.

• Support includes:
• Supporting system and process updates as HMRC guidance evolves
• Reviewing current benefits and payroll processes
• Assessing readiness for the 2027/28 mandatory regime
• Advising on the treatment of loans and accommodation
• Preparing employee communications

Please feel free to contact us or one of our member firms for more information.