From April 2027, Benefits in Kind (BIK) payments will need to be paid and recorded via payroll each month. Businesses need to prepare for this change.
What are Benefits in Kind?
Benefits in kind are also known as in-kind or fringe benefits. They are non-cash perks provided by employers to their employees, such as health insurance, company cars or even subsidised meals.
Currently, employers fill in an annual P11D form that is shared with HMRC. But from 2027, BIK needs to be recorded monthly.
What changes will impact Benefits in Kind?
The main change is a transition to reporting BIK payments monthly, rather than annually. BIK reporting will become part of the monthly payroll, and subject to tax and National Insurance Contributions (NIC) as other payments made to each employee.
However, businesses will still need to produce an annual BIK summary by 1st June each year. This means BIKs are reported twice.
What you need to do
- Review your benefits policy. Do you need to make any changes to this to prepare for changes in how BIKs are paid and taxed? Remember to communicate this clearly to any impacted employees.
- Make the changes now. HMRC is happy for businesses to start adjusting to the new way of working ahead of 2027 – you will need to register with HMRC before the start of the 2026 tax year to do so.
- Talk to your payroll person or team. Incorporating BIKs into your monthly payroll may take time and planning, so get ahead!
- Start to track BIKs on a monthly basis even if you do not swap to reporting or paying monthly.
Some businesses already pay BIK via their monthly payroll. These businesses still need to re-register before 5 April 2027.
If you use the Government Real Time Information (RTI) software to manage your payroll, watch out for new fields for BIKs payments.
Read more about BIKs here https://www.gov.uk/tax-company-benefits.
HB Accountants’ payroll bureau is ready to assist you if you would like to talk. We are here to help businesses of all sizes – free to give the team a call on 01992 444466.
The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any errors or omission or for any person acting on or refraining from acting on the information provided in the above
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