BiKs payroll reporting is rolled back

The government has announced additional time for businesses to prepare for the introduction of mandatory payrolling for benefits in kind (BiKs) and taxable employment expenses.

In a move that will be welcomed by hard-pressed small businesses, mandatory payrolling will be introduced from April 2027 rather than April 2026. HMRC says it has made the change following external feedback.

In a statement announcing the delay it said: “This will provide more time for software providers, employers, tax agents and other stakeholders to prepare for the change.”

A technical note advising of the change of date also provides more operational information on mandatory payrolling so that businesses can adapt to the changes in time for April 2027.

The move seems like common sense and should help most small businesses, particularly those individuals faced with additional administration and costs of Making Tax Digital for Income Tax and the additional costs imposed by the increases to employers’ National Insurance contributions.

Biks are goods and services that are provided by companies to an employee for free or at greatly reduced cost.

The introduction of mandatory payrolling for BiKs is all part of HMRC’s plan to simplify and modernise the UK tax system.

When it comes into force the new reporting system will be mandatory for most benefits in kind and expenses. Employers will also be able to payroll employment-related loans and accommodation on a voluntary basis from April 2027.

• To discuss any issues raised by this article please contact me on 01772 430000.