At the Autumn Budget 2024, the government confirmed that it would proceed with plans to mandate payrolling of most BiKs from April 2026. Mandatory payrolling had first been announced by the previous government in January 2024. 

ICAEW’s concerns 

In March 2024, following a period of informal consultation, ICAEW raised its objections to the policy in a letter to HMRC. Pointing to the additional costs for employers and HMRC, ICAEW questioned if mandatory payrolling of BiKs was “the most cost-efficient answer” compared to making the form P11D process fit for purpose, and urged HMRC to undertake a full cost/benefit analysis.  

Outstanding issues and questions 

In a representation sent to HMRC, ICAEW has said that it remains of this view and has set out several outstanding issues and questions across three categories:

• Operational considerations. ICAEW has asked for clarification in a number of areas, including:
• the requirement to report more information on payslips and to HMRC;
• dealing with mid-year starters and leavers; and
• the interaction with income tax self assessment tax returns.
• End of year process/month 13 reconciliation and class 1A NIC. Although ICAEW supports the introduction of an end of year process, it has a number of questions as to how the process should work. Guidance will be needed to help employers manage the change to calculating class 1A NIC on a pay period basis. It is also important that action is taken to address current liabilities and payments reconciliation issues on HMRC’s enterprise tax management platform.
• Globally mobile/expatriate employees. Owing to practical issues relating to operating expatriate payrolls, ICAEW recommends that they are treated separately from domestic payrolls and that, at least initially, they are excluded from mandatory payrolling of BiK.

Need for a ‘soft landing’ 

ICAEW is concerned that the proposed start date of 6 April 2026 does not allow enough time for software to be fully developed and tested, or for employers and third parties, such as fuel card providers, to change their procedures to ensure that BiK data can be processed in payroll at the right time. At the very least there should be a ‘soft landing’ period of at least two years.    

Deadline for voluntary registration 

Pending the introduction of mandatory payrolling, employers can register voluntarily to payroll BiK, and they may wish to consider doing this for 2025/26 so that they can test the process before it becomes mandatory for 2026/27. However, the deadline for registering for 2025/26 is 10pm on 5 April 2025. As many employers may not be in a position to payroll BIK at that point, or may be unaware of the deadline, ICAEW has asked HMRC to consider allowing employers to begin payrolling benefits during 2025/26. 

Further information 

• ICAEW The Tax Track podcast episode Time to prepare for MTD and BiK 
• ICAEW TAXline article How to prepare for mandatory payrolling of benefits in kind