Glossary · UK

What is Payrolling Benefits?

Taxing benefits in kind through payroll in real time rather than via P11D — being made mandatory for most benefits.

Full Definition

Payrolling benefits means putting the cash equivalent of a benefit in kind through the payroll each pay period, so the Income Tax due is collected via PAYE in real time instead of being coded out or reported on a P11D after the tax year ends. The employee sees the BIK value added to their taxable pay on each payslip. The government is making payrolling of most benefits mandatory, with the start date announced as April 2026 and later confirmed as moving to April 2027, removing the need for annual P11D forms for those benefits. Employer Class 1A National Insurance on the benefits — 15% for 2025/26 — is still reported and paid separately after year end. Beneficial loans and employer-provided accommodation were initially excluded from mandatory payrolling.