HMRC has pushed back the requirement to payroll Benefits in Kind (BIK) until 2027, offering employers a little more breathing room.
However, while the delay may ease immediate pressure, it is not a reason to put preparation on hold.
The change, when it arrives, will significantly alter how businesses report and manage employee benefits, and the administrative workload will increase as a result.
From annual returns to monthly reporting
At present, many employers still report BIK through annual P11D forms. Under the new system, these benefits will be taxed monthly through payroll, with tax and National Insurance Contributions (NICs) collected in real time.
This change means employers must adjust their systems to track and process BIK on a rolling monthly basis.
While this may improve long-term visibility and cash flow predictability, it also introduces more frequent admin tasks and the potential for short-term cash pressures.
Dual reporting obligations remain
Even with the switch to monthly payroll reporting, businesses will still be expected to produce an annual BIK summary each year, due by 1 June.
The result is a dual burden: monthly updates combined with an annual wrap-up, requiring careful record-keeping throughout the year.
What should businesses be doing now?
Even with the 2027 deadline a few years off, there are practical steps you can take now to get ahead of the change:
Make the transition to BIK payrolling smoother
The move to monthly BIK reporting marks a significant change in how businesses manage employee benefits.
Starting preparations now will reduce disruption later and put you in control of the process.
Need help? Contact us for expert advice and payroll support today.
