From 6 April 2027, employers must start taxing certain benefits in kind through payroll rather than reporting them on P11D forms. HMRC has confirmed a phased approach: company cars, car fuel, vans, van fuel and medical benefits come first, with most other benefits following from April 2028. Voluntary registration for other benefits opens in November 2026, so now is the time to prepare.

What’s changed

For decades, most employers have reported benefits such as company cars and private medical insurance on an annual P11D, with employees paying the tax later through a tax code adjustment or Self Assessment. The government confirmed some time ago that this would move to real-time payrolling. HMRC has now set out the detail.

According to the HMRC Employer Bulletin for August 2026, mandatory payrolling will be introduced in phases between 6 April 2027 and 5 April 2028:

  • Phase 1 (from April 2027): company cars, car fuel, vans, van fuel and medical benefits.
  • Phase 2 (from April 2028): most other benefits.
  • Voluntary option: from November 2026, employers can register to payroll voluntarily any benefits not mandated from April 2027, including loans and accommodation.

HMRC’s Agent Update issue 147 added further points:

  • Globally mobile employees are exempt from mandatory payrolling, with a registration route (the “G-Form”) expected from November 2026.
  • Class 1A National Insurance: employers who voluntarily payroll benefits that are not yet mandated will also need to account for Class 1A NICs through payroll from 6 April 2027.
  • Updated HMRC guidance is promised in autumn 2026.

Who it affects

  • Any employer providing company cars or vans, including owner-managed companies where the director has the only company car.
  • Employers paying for private medical insurance or similar medical benefits.
  • Employees, who will see tax on these benefits deducted each payday instead of through a tax code adjustment or a later bill.
  • Payroll bureaux and software providers, who must handle real-time benefit reporting.

Key dates

  • Autumn 2026 – updated HMRC guidance expected.
  • November 2026 – voluntary payrolling registration opens for non-mandated benefits; G-Form registration expected for globally mobile employees.
  • 6 April 2027 – mandatory payrolling of Phase 1 benefits begins.
  • April 2028 – mandatory payrolling extends to most other benefits.

What you should do now

  1. List every benefit you provide that you would normally report on a P11D, as HMRC recommends.
  2. Separate Phase 1 benefits (cars, fuel, vans, medical) from the rest.
  3. Check your payroll software can report benefits in real time from April 2027.
  4. Gather accurate data: car list prices, CO2 emissions, fuel type and medical premium costs.
  5. Plan for joiners and leavers part-way through the tax year.
  6. Tell employees early. Their take-home pay will change, and some may pay 2026/27 tax through their tax code while 2027/28 tax is taken through payroll.
  7. Consider voluntary payrolling for other benefits from November 2026, remembering the Class 1A change.

Our payroll services can review your benefits, update your payroll and manage the switch for you.

FAQs

Will P11D forms disappear completely?

Not straight away. HMRC says employees whose benefits are payrolled should not receive a P11D, but benefits not yet mandated and not voluntarily payrolled will still need reporting under the existing rules during the transition. Class 1A reporting arrangements are also changing, so check HMRC’s autumn guidance.

I’m a one-person company with a company car. Does this apply to me?

In most cases, yes. If your company runs a payroll and provides you with a car, expect the benefit to be payrolled from April 2027, even if you are the only employee. Any exemptions will be confirmed in HMRC’s final guidance, so check before April.

Do I have to wait until April 2027?

No. Many employers already payroll benefits voluntarily. Registering early can make the transition smoother, but get the timing right because registration normally has to be in place before the start of the tax year.

Talk to Alpha Business Services

Want a smooth switch from P11Ds to payroll? Contact Alpha Business Services for a benefits review and a clear plan before April 2027.

This article is general information, not advice, and is correct as at 28 September 2026. Take advice on your own circumstances before acting.