Mandatory Payrolling Updates released

From the 6th April 2027, employers who voluntarily payroll Benefits in Kind that are not yet subject to mandatory payrolling will also need to account for the associated class 1A National Insurance contributions through payroll in real time.

In this current moment, an employer can voluntarily deal with all the Income Tax that is due on a benefit when they handle with with the Class 1A NIC at end of the tax year, but from April 2027, this split approach will no longer be permitted.

So in simple terms, if you choose to payroll the benefit, you'll need to payroll both the Income Tax and associated Class 1A NIC.

For payroll and HR teams, this will mean reviewing which benefits are voluntarily payrolled and making sure that the processes and systems are ready ahead of April 2027!