HMRC mandatory payrolling update: September 2026 changes

HMRC has announced further updates to the mandatory payrolling of benefits in kind (BiKs), providing additional clarification for employers ahead of the phased introduction from 6 April 2027.

Following the changes announced in June 2026, which we covered in our earlier article, HMRC mandatory payrolling update: phased rollout confirmed, HMRC issued further guidance on 16 September 2026 covering two key areas: Class 1A National Insurance contributions (NICs) for voluntarily payrolled benefits and exclusion options for globally mobile employees.

Class 1A National Insurance contributions for voluntarily payrolled benefits

From 6 April 2027, employers who choose to voluntarily payroll benefits that are not mandatory under phase 1 must calculate, report and pay any associated Class 1A NICs in real time.

Employers cannot choose to payroll the Income Tax on these benefits while reporting the associated Class 1A NICs separately at the end of the tax year.

However, employers can continue reporting non-mandated benefits through forms P11D and P11D(b), where this reporting process is more suitable, until phase 2 of mandatory payrolling is introduced, currently planned for April 2028.

Exclusion options for globally mobile employees

From 6 April 2027, employers will have the option to exclude globally mobile employees (GMEs) from mandatory payrolling of benefits in kind.

Where employers choose this option, they can continue using the existing year-end reporting arrangements through forms P11D and P11D(b).

HMRC has confirmed that a new service to manage these exclusions will become available from November 2026.

Further information is available in HMRC’s mandatory payrolling of benefits in kind and expenses: interim guidance and legislation.

HMRC publishes RTI technical specifications for 2027/28

HMRC has also published the Real Time Information (RTI) technical specifications and Data Item Guide for the 2027/28 tax year, with the latest update issued on 6 October 2026.

These documents provide payroll software developers and payroll professionals with further details of the reporting requirements for phase 1 of mandatory payrolling, which begins on 6 April 2027.

The updated requirements introduce additional data fields to capture information about benefits in kind and Class 1A NICs. These include reporting values for individual pay periods and year-to-date totals.

The technical requirements will help employers and payroll software providers prepare for reporting benefits in kind through the Full Payment Submission (FPS).

HMRC plans to publish further detailed guidance in autumn 2026.

What should employers do ahead of April 2027?

Employers should review their existing benefits in kind reporting arrangements and consider whether voluntary payrolling remains appropriate for benefits outside phase 1.

Those with globally mobile employees should also consider whether the new exclusion option may be relevant to their workforce.

Employers should also ensure they can provide accurate benefits information in time for payroll processing and meet the new RTI reporting requirements.

Speak to our payroll services team

If you have questions about mandatory payrolling of benefits in kind or would like to discuss how these changes may affect your reporting arrangements and the information you need to provide to us, please contact our payroll services team.

Our team will be happy to help you prepare for the changes ahead of April 2027.

Frequently asked questions about mandatory payrolling

Can employers continue using P11D forms after April 2027?

Yes. Employers can continue using forms P11D and P11D(b) for benefits that are not subject to mandatory payrolling during phase 1. Employers who choose to exclude eligible globally mobile employees can also continue using the existing year-end reporting arrangements.

Do employers need to report Class 1A NICs in real time from April 2027?

Yes. From 6 April 2027, employers must report Class 1A NICs in real time for benefits subject to mandatory payrolling. This also applies to benefits that employers choose to payroll voluntarily, even where those benefits are not mandatory under phase 1.