What is changing?
From the 6th of April 2027, employers will be required to report certain Benefits in Kind through payroll, in real time.
The first phase will cover:
- Company cars
- Company car fue;
- Company vans
- Van fuel
- Employer-provided medical benefits
This means employers will need to ensure their payroll systems and processes are able to calculate and report these benefits correctly.
What about salary sacrifice cars?
The changes are particularly relevant to employers offering salary sacrifice cars.
Salary sacrifice cars are treated as a Benefit in Kind, meaning employers will need to ensure the relevant vehicle information can be reported through payroll from April 2027.
Employers that already payroll vehicle benefits may find the transition relatively straightforward. However, businesses that currently use other processes may need to make changes to their systems and procedures.
Key Dates
6th of April 2027
Mandatory payrolling begins for:
- Company cars
- Car fuel
- Vans
- Van fuel
- Employer-provided medical benefits
6th of April 2028
Mandatory payrolling will be extended to most other Benefits in Kind.
Loans and accommodation
Loans and accommodation benefits will remain outside the mandatory regime for now and can continue to be payrolled voluntarily.
What do employers need to do?
Employers providing company cars, salary sacrifice vehicles or vans should start preparing for the change.
This could include:
- Reviewing how Benefits in Kind are currently reported.
- Checking that payroll systems can support the new requirements.
- Making sure accurate vehicle information is available.
- Reviewing processes for company car and salary sacrifice schemes.
- Speaking to payroll or tax advisers where additional support is needed.
What happens next?
HMRC is continuing to develop the detailed technical guidance around mandatory payrolling.
Further guidance and stakeholder engagement are expected during 2026, with final guidance expected later in the year.
Employers should therefore keep an eye on the latest HMRC updates as the implementation date approaches.
The key takeaway
The move to mandatory payrolling represents an important change for employers providing company cars, salary sacrifice vehicles and other employee benefits.
From April 2027, vehicle-related Benefits in Kind will need to be reported through payroll in real time.
Preparing early can help employers make sure their payroll systems and processes are ready for the change and minimise disruption when the new rules come into effect.
