Mandatory payrolling benefits in kind: HMRC announce updates re Class 1A National Insurance and globally mobile employees

Following the previous announcement of the phased implementation of mandatory payrolling of benefits in kind, HMRC have now announced some further details of how this will apply from April 2027.

Instead of the previous plan to require payrolling of all benefits in kind from April 2027, the June 2026 announcement confirmed this will now only to certain benefits (company cars and fuel, vans and van fuel, private medical insurance and other employer provided medical benefits). Whilst it was clear that Class 1A National Insurance would need to be accounted for in real time for benefits under mandatory payrolling, HMRC had not confirmed whether this would be the case for benefits payrolled voluntarily. This is an area that the ATT had been seeking clarification on.

After dialogue with various different stakeholders, HMRC have now published updated guidance explaining the Class 1A National Insurance treatment where an employer chooses to voluntarily payroll a benefit from April 2027. HMRC have confirmed that any associated Class 1A National Insurance contributions must be payrolled in real time, in the same way as benefits under mandatory payrolling.

HMRC have also confirmed that it will be possible for globally mobile employees to be opted out of mandatory payrolling of benefits from 6 April 2027 and continue to report benefits through forms P11D and P11D(b). A new HMRC service to allow them to do so will be launched in November 2027.

The ATT will continue to have dialogue with HMRC in the coming months ahead of the phased implementation of mandatory payrolling of benefits in kind. We would be interested to hear any feedback from employers, agents and payroll providers about their preparations - please email [email protected] with any comments or concerns.