Another significant change to payroll is now only six months away.
From 6 April 2027, employers will have to report and account for tax on several common benefits in kind through payroll in real time.
The first phase covers company cars, car fuel, vans, van fuel and employer-provided medical benefits.
At present, many employers deal with benefits after the tax year has ended using forms P11D. The new system brings the tax consequences into the payroll process throughout the year.
That makes preparation important.
Employers should start by identifying exactly which benefits they provide and to whom. Company vehicles may be obvious, but private medical insurance can involve larger groups of employees and changes during the year.
The next question is whether your existing payroll software will be ready.
From April 2027, the relevant benefit information will be included within the Full Payment Submission, or FPS, which employers already use to report salary and employee details to HMRC. Payroll processes will therefore need accurate information about benefits as they arise rather than waiting for an annual P11D exercise.
This may require better communication between whoever arranges benefits and whoever operates payroll. Suppose an employee changes company car halfway through a month or joins the company medical scheme. How quickly does the payroll team find out?
That seemingly simple question could expose a weakness in the current process.
The change is being phased. Most other benefits are expected to move into mandatory payrolling from April 2028, while employment-related loans and accommodation have separate arrangements.
There is no need to wait until next April.
Make a list of the benefits your business currently provides, establish which employees receive them and check that your payroll provider or software will support the new reporting requirements.
Six months is plenty of time to prepare.
It becomes considerably less comfortable if the first review takes place when the April payroll is already being processed.