News & Events
Payrolling benefits delayed to 2027: Why you should still act now
21st May 2025
Payrolling benefits delayed to 2027: Why you should still act now
HMRC recently announced that payrolling employee benefits will now become mandatory from April 2027 instead of the originally proposed April 2026. While this delay may offer some breathing space for businesses, it shouldn’t be mistaken as a reason to put off preparing. Rowleys’ Payroll Manager, Rebecca Gotch, shares her thoughts on the delays to payrolling benefits and why it’s important for employers to act now.
As someone who fully supports payrolling benefits, I believe this approach is the logical next step in modernising how we handle employee benefits. It improves accuracy, allows real-time tax deductions via PAYE, and removes the annual headache of P11D submissions. Simply put,it makes sense.
Voluntary payrolling has been available since April 2016, and we’ve long encouraged our clients to adopt it. But it’s fair to say the process hasn’t always been as accessible as it could be. One of the most significant barriers until now has been the inability for agents to register on behalf of clients. That only changed in the run-up to the 2025/26 tax year. Had that functionality been introduced earlier, I suspect many more businesses would already be onboard, and better positioned for a mandatory rollout.
So, is the delay a good thing?
I believe the delay to 2027 is a sensible move, largely because HMRC has been slow to provide the detailed legislation and guidance needed to support a smooth transition. Although the voluntary rules are established, the specific requirements of the mandatory regime were expected to be published by July 2025, just nine months ahead of the original go-live. That simply wasn’t enough time for businesses, payroll providers, and software developers to prepare properly.
And while many benefits are relatively easy to payroll, others – such as director benefits, low or zero-interest loans, or living accommodation – introduce complexities. Add in potential issues like correcting errors or payrolling for employees not processed through regular payroll systems, and it’s clear that robust, practical guidance is essential.
So yes, a delay makes sense, but it shouldn’t stall progress.
Get ahead of the game
Despite the delay, I would strongly encourage businesses to voluntarily payroll benefits where they can. It streamlines reporting, improves employee tax accuracy, and significantly reduces the year-end burden. Starting now gives you time to iron out any teething issues and get fully up to speed before the mandatory deadline.
This shift has been coming for years, it shouldn’t be a surprise to anyone. But it is yet another in a long line of changes that continue to expand the role and responsibilities of payroll teams. From RTI to auto-enrolment, and now payrolling benefits, the demands on payroll professionals have increased dramatically.
Payroll deserves more recognition
Too often, payroll is treated as a bolt-on to finance or HR. In reality, it’s a complex, high-responsibility function that demands specialist knowledge. As these changes come into force, businesses need to ensure they have the right expertise in place, whether that’s an internal team or outsourced professionals.
In short: don’t let the delay to 2027 lull you into inaction. Use the extra time wisely. Start voluntary payrolling now where possible, seek expert advice, and get ahead, this change is coming, and the businesses that prepare early will be the ones who benefit the most.
For more information on payrolling benefits, visit the HMRC website.
Our CIPP-qualified payroll experts manage all aspects of payroll. We work with hundreds of clients of different sizes To find out more about our payroll services, please contact Rebecca Gotch, either by email: rebecca.gotch@rowleys.biz or call: 0116 282 7000.