WFM UK | Payroll UK & BIK: Updated Phased Introduction of Mandatory Payrolling of Benefits – Fourth & HotSchedules Customer Success Portal

On the 15th June 2026, HMRC has confirmed the introduction of a phased approach to Mandatory Payrolling of Benefits in Kind (MPBiKs), replacing the previous plan for full mandatory payrolling from April 2027.

Important: This currently interim guidance, and we expect more in late Summer and Autumn 2026.

Mandatory payrolling of benefits in kind and expenses – interim guidance and legislation

What has changed?

Rather than mandating payrolling of all Benefits in Kind at once, HMRC is introducing the requirement in two phases:

Phase 1 - April 2027 - Covers company cars and car fuel, company vans and van fuel, and private medical and dental benefits. These benefit types are estimated to account for around 80% of all Benefits in Kind provided by employers. Alongside mandatory payrolling, Class 1A National Insurance contributions will also apply to these benefits from the
Phase 2 - April 2028 - Extends mandatory payrolling to most remaining benefit types, with the exception of loans and accommodation.

If you use, or will use, our BIK module then the table below shows which benefits (as defined in our system) will become subject to mandatory payrolling, and when:

Phase 1	Phase 2	Voluntary Payrolling: April 2027 Mandatory Payrolling: TBC
Mandatory Payrolling from April 2027:	Mandatory Payrolling from April 2028:
Company Cars & Car Fuel	Assets Transferred (Cars, Property, Goods)	Living Accommodation
Company Vans & Van Fuel	Payments made on behalf of employee	Interest-free and low interest loans
Private medical treatment or insurance	Vouchers
	Credit, Debit and Charge Cards
	Mileage allowance payments not taxed at source
	Qualifying relocation expenses payments and benefits
	Services Supplied
	Assets placed at the employee’s disposal
	Other items
	Expenses payments made on behalf of the employee

What does this mean for April 2027 preparation?

Employers and payroll teams should focus their preparation on the Phase 1 benefits: company cars, vans, and private medical.

It is worth noting that company cars provided through salary sacrifice or Optional Remuneration Arrangements are included within the Phase 1 mandate and must be payrolled from April 2027 in the same way as conventionally provided vehicles.

Other benefit types not covered by Phase 1 may still be payrolled voluntarily. If you currently voluntary payroll additional benefits, you can continue to do so ahead of mandatory payrolling in April 2028.

Technical specifications & Real Time Information

The MPBiKs technical specifications published in November 2025 were drafted on the basis of full mandatory payrolling from April 2027. As a result of the phased approach, 94 RTI data fields relating to Benefits in Kind have been removed from the current specification. Updated specifications, including confirmed RTI data fields for Phase 1, are expected to be issued by HMRC in autumn 2026.

The development Fourth had already scoped for FPS and EXB submission changes will remain in place, scaled back to focus on Phase 1, with Phase 2 items deferred to the April 2028 release cycle.

For the April 2027 tax year, the reporting approach may differ depending on the phase:

For Phase 1 benefits (company cars, vans, and private medical and dental), additional FPS data items will be introduced as originally planned. Class 1A National Insurance will be reported through the FPS, removing the requirement to submit a P11D(b) and EXB submission for those benefits.
For Phase 2 benefits, the additional FPS data items have been removed from the 2027 tax year schema. If you voluntarily payroll these benefits, the reporting process remains unchanged from the 2026 tax year. Class 1A National Insurance for these items will continue to be reported via P11D(b) and submitted through the EXB submission to HMRC via RTI (Subject to further updates, see important below).
- From April 2028, Phase 2 benefits will move to the same reporting process as Phase 1.

Important: There are still outstanding matters to be resolved, including the potential to introduce voluntary Class 1A reporting for non-mandated benefits. Fourth will continue to monitor this and we will update this guidance as further clarity is provided.

Updated interim guidance for employers, payroll professionals, software providers and tax agents is due to be published on GOV.UK in July 2026.

Next Steps

Watch for the updated HMRC guidance on GOV.UK in July 2026, and the revised technical specifications expected in autumn 2026. In the meantime, begin focusing readiness activity on the Phase 1 benefits ahead of the April 2027 deadline.

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