In this guest blog, Payroll Manager Rebecca Gotch from Rowleys Accountants shares her thoughts on HMRC’s recent announcement to delay mandatory payrolling of employee benefits until April 2027. While the extra time may come as a relief to some, Rebecca explains why businesses should still be taking action now to prepare – and how doing so could bring real benefits well before the deadline.
Why payrolling benefits makes sense
Payrolling benefits allows for real-time tax deductions via PAYE and eliminates the annual headache of P11D submissions. It’s a logical step forward in modernising employee benefits processing – improving accuracy, transparency, and efficiency.
Voluntary payrolling has been available since April 2016, but uptake has been slower than expected. One reason for this has been the historic limitation that prevented payroll agents from registering on behalf of clients – a hurdle only recently removed in preparation for the 2025/26 tax year. Had this functionality been available sooner, more businesses might already be ahead of the curve.
Payrolling benefits delayed: A sensible delay – but not a reason to wait
The revised 2027 deadline is widely seen as a pragmatic move. The voluntary framework may be well established, but the detailed legislation and technical guidance around the mandatory requirements had been expected as late as July 2025 – just nine months before the original go-live date. That simply didn’t give businesses, payroll software providers, or advisors enough time to prepare.
And while many common benefits (like medical insurance or gym memberships) are relatively straightforward to payroll, others – such as director benefits, beneficial loans, and living accommodation – present far more complexity. There are also potential issues around error corrections and processing benefits for employees not on regular payroll runs.
So yes, the delay gives much-needed breathing space. But it shouldn’t slow momentum.
Why now is the time to act
Businesses that start voluntarily payrolling now stand to gain more than just compliance. It streamlines reporting, supports more accurate employee taxation, and reduces the administrative burden at year-end. Importantly, adopting it early gives organisations the opportunity to resolve any teething issues well before the mandatory rollout.
This change has been on the horizon for years. It’s the latest in a series of developments – from RTI to auto-enrolment – that continue to elevate the role of payroll teams. The responsibilities placed on payroll professionals have grown considerably, and it’s vital that businesses ensure they have the right expertise in place.
Recognising the value of payroll
Payroll is too often treated as a back-office bolt-on to finance or HR. In truth, it’s a specialist, high-stakes function that underpins employee trust and tax compliance. As legislative changes continue to impact the way pay and benefits are administered, recognising – and investing in – payroll expertise is more important than ever.
Final thoughts
Don’t let the 2027 delay lull you into a false sense of security. This change is coming, and those who act now will be in a far stronger position. Start with voluntary payrolling where possible, seek expert guidance, and use the time to prepare thoroughly. Businesses that take a proactive approach now will avoid unnecessary disruption and reap the benefits down the line.
Need help navigating payrolling benefits?
If you’d like support with payrolling benefits or any aspect of payroll, the team at Rowleys can help. With extensive experience and a practical, down-to-earth approach, they work with businesses of all sizes to ensure compliance, efficiency, and peace of mind. Contact Rebecca Gotch at rebecca.gotch@rowleys.biz or call 0116 282 7000 to find out more.
The information in this article is intended as a general guide to payrolling benefits and may not cover all individual circumstances. We recommend consulting with a payroll professional or your financial advisor for tailored advice specific to your business.
