HMRC has delayed the introduction of mandatory real-time reporting of income tax and Class 1A National Insurance contributions (NICs) for certain benefits in kind (BiKs) and taxable expenses. The Labour Party government tax authority confirmed that the changes will now be phased in from 6 April 2027, rather than being implemented all at once as originally planned.
Phased Implementation Details
Phase one will only cover motoring expenses and medical benefits. HMRC has removed 94 categories from the initial rollout, signalling a significant watering down of the original blanket plan that would have affected nearly all benefits in kind. This means employers will have to manage two systems simultaneously, increasing administrative pressure.
Expert Reaction
Caroline Harwood, head of employment tax at BDO, commented: “While mandatory payrolling of company car, car fuel, vans, van fuel and employer-provided medical benefits will be introduced from April 2027, most other benefits in kind will be added from April 2028. This will put extra pressure on employers which will now have to contend with two systems rather than one. It will also lead to confusion among taxpayers as to why their payslip has changed for some, but not necessarily all, benefits, what their tax code means, and what to expect during and at the end of the tax year. There is a strong argument to say that the whole scheme should be postponed until such time as HMRC is ready to implement the payrolling of all BIKs at the same time.”
HMRC Communication
HMRC wrote to taxpayers stating: “Updated MPBiKs technical specifications for phased mandation and confirmed RTI data fields for Phase 1 will be issued after the RIM artefacts have been finalised. We expect to share these in autumn 2026 and will contact you again when they are available. Updated interim guidance for employers, payroll professionals, software providers and tax agents will also be published on GOV.UK in July 2026. We accept that some developers may have already started work on the previously distributed RIM artefacts. We have taken this phased approach in consultation with industry representatives as we believe it is the way forward to meet wider stakeholders’ needs. We welcome technical feedback on any impact these changes have on your development. If you have any questions or require further clarification, please contact the Software Developer Support Team using the support link on the HMRC Developer Hub.”
