Mandatory Payrolling of Benefits

The Co-Chair, Justine Riccomini, of HMRC's Employment and Payroll Group wrote to the FST Nigel Huddleston MP expressing concerns that the group had about the timetable for the mandatory payrolling of benefits by 6 April 2026. The letter raised concerns about:

• the increased administration & costs for employers,
• how to payroll beneficial loans and living accommodation
• software
• employees making good
• the interaction with student loans (he taxable amount of a benefit in kind is not considered when calculating student loan repayments)
• the interaction with employment legislation
• training and modified schemes.

The complete letter can be found Letter-to-Rt-Hon.-Nigel-Huddleston-re-payrolling-of-BIKs-March-2024.pdf (icas.com).

Justine has now received a response which states that:

"I recognise the importance of your expertise and forward thinking in ensuring such changes are delivered successfully. I understand employers and third parties will need to make significant preparations across many areas, such as providing staff with sufficient training and ensuring systems are developed and ready to commence reporting ahead of time, to make these changes feasible.

The points you raise in your letter will be carefully considered alongside other feedback. HMRC officials will schedule further meetings with external stakeholders ahead of summer recess to discuss revisions to the current proposals. The Government remains committed to simplifying the tax system, and will review your feedback about possible changes to the underlying BiKs legislation as it considers further options.

I can assure you that officials will continue to engage closely with EPG and other relevant stakeholder groups over the coming months to ensure the policy design works effectively for all parties impacted by this measure. I appreciate the time you have taken to set out your concerns on behalf of EPG and for working alongside HMRC colleagues during this initial phase of informal consultation."

I believe that the successful mandatory payrolling of all benefits in kind for all types of payroll is not feasible by the 6 April 2026 deadline. I therefore hope that the above understanding that "employers and third parties will need to make significant preparations across many areas, such as providing staff with sufficient training and ensuring systems are developed and ready to commence reporting ahead of time, to make these changes feasible." will lead to more time for payroll systems to be developed.

I understand the full letter from the FST will be published on the ICAS website. I will add a link when it has been published.