The P11D you are filing by 6 July is one of the last that will ever cover a company car. From 6 April 2027, reporting most benefits in kind on a year-end form stops being a choice. HMRC is moving the whole thing into real-time payroll, and the first wave lands on the benefits most employers actually provide.
TL;DR: Payrolling benefits in kind becomes mandatory from 6 April 2027. Phase 1 covers company cars and fuel, vans and fuel, and private medical cover. Most other benefits follow in April 2028. Income tax and Class 1A National Insurance get reported and paid in real time through payroll, not on a P11D. You do not need to register for the mandatory benefits, but loans and accommodation stay on the old system for now.
What Is Changing for Benefits in Kind in 2027?
From 6 April 2027, employers must report and tax most benefits in kind through payroll in real time, rather than on an annual P11D. Income tax and Class 1A National Insurance both move onto the Full Payment Submission, paid as the benefit is provided (GOV.UK technical note, 2026).
The Government confirmed at Tax Update 2026 that the rollout will be phased over two years instead of switching on all at once (GOV.UK Tax Update 2026, 2026). That gives employers more runway, but it also means two separate start dates to plan around. The clock has already started: voluntary payrolling for the current year closed on 5 April 2026.
Phase 1 Starts With Cars, Vans and Medical Cover
The first phase from 6 April 2027 captures the benefits most small companies provide: company cars and car fuel, vans and van fuel, and employer-provided private medical benefits (activpayroll, 2026). Most remaining benefits then move into mandatory payrolling from April 2028.
These are not niche perks. HMRC recorded 840,000 company car recipients in 2023-24, up 80,000 on the prior year, with a total taxable value of £3.27 billion (GOV.UK benefit-in-kind statistics, 2025). If a director runs a company car or the business pays for private medical insurance, this change applies directly.
What Happens to the P11D and P11D(b)?
For Phase 1 benefits, the P11D disappears from April 2027. You report the cash equivalent through payroll instead, and HMRC removes those benefits from employee tax codes automatically ahead of the switch. There is one transition wrinkle worth flagging now.
You will still file a P11D and P11D(b) for the 2026-27 tax year by 6 July 2027 under the old rules, because that covers benefits provided before the change. The form does not vanish overnight. Employment-related loans and living accommodation also keep the P11D for a temporary period, so the year-end form survives in a narrower role beyond 2027.
Do You Need to Register to Payroll Benefits?
For the mandatory benefits, no. From April 2027 you do not register at all. HMRC switches you into real-time reporting and adjusts tax codes for you, which is a genuine simplification compared with the current voluntary process.
The exception is loans and accommodation. If you want to payroll those voluntarily, the registration service for 2027-28 opens in November 2026 with a deadline of 5 April 2027 (GOV.UK guidance, 2026). In our experience, the employers caught out by payrolling deadlines are the ones who assume registration is automatic for everything. It is not, and missing the loans-and-accommodation window means another year on the P11D.
Real-Time Class 1A NIC Creates a Cash-Flow Trap
The detail that catches employers out is timing. Class 1A National Insurance currently falls due once a year, by 22 July after the tax year ends. From April 2027 you pay it in real time through payroll instead.
That creates a one-off overlap. In July 2027 you will still owe Class 1A on 2026-27 benefits under the old P11D(b) system, while already paying real-time Class 1A on benefits provided from April 2027 onward. What we see most often is businesses budgeting for one Class 1A bill when, for that single month, there are effectively two. Set the cash aside now so the overlap does not become a scramble.
How Should You Prepare Before April 2027?
Start with your payroll software. Confirm your provider can handle benefit-in-kind reporting through the Full Payment Submission, because not every package does this cleanly yet. If you run payroll in-house, this is the single biggest readiness question.
Then list every benefit you provide and map each to its start date: cars, vans and medical cover for 2027, the rest for 2028. One question clients always ask is whether they should jump early and payroll voluntarily before they are forced to. Often the answer is yes, because a year of practice under the old voluntary rules makes the mandatory switch far less painful. If you are weighing that up, our guide to the 6 July P11D deadline covers the year-end mechanics you are about to replace.
Frequently Asked Questions
When does payrolling benefits in kind become mandatory?
From 6 April 2027 for the first phase: company cars and car fuel, vans and van fuel, and employer-provided private medical benefits. Most other benefits follow from April 2028. Loans and accommodation stay on the P11D temporarily beyond that.
Will the P11D form be abolished completely?
Not entirely, and not immediately. The P11D goes for Phase 1 benefits from April 2027, but you still file one for 2026-27 by 6 July 2027, and loans and accommodation keep the form for a temporary period. Treat 2027 as the start of the wind-down, not a clean break.
Do I need to register to payroll benefits from April 2027?
No, not for the mandatory benefits. HMRC moves you into real-time reporting and adjusts tax codes automatically. Registration is only needed if you choose to voluntarily payroll loans and accommodation, where the deadline is 5 April 2027.
How does this affect company car tax?
The tax on the car does not change, but how it reaches HMRC does. From April 2027 the cash equivalent is added to pay each period and taxed through payroll, rather than collected through a tax code adjustment after a year-end P11D. Employees see the benefit taxed in real time on their payslip.
What should small employers do right now?
Check your payroll software supports benefit reporting through the Full Payment Submission, list which benefits you provide and when each phase starts, and budget for the July 2027 Class 1A overlap. If you provide cars or medical cover, you are in the first wave. Reviewing your employer payroll obligations ahead of time avoids a rushed transition.
Not sure your payroll setup is ready to report benefits in real time, or whether to start payrolling before April 2027 forces your hand? Talk to our team - we work with UK employers on payroll and benefit-in-kind reporting and can map your benefits to the right phase before the deadline arrives.