Around 920,000 people received a company car in the 2024 to 2025 tax year, and the total taxable value of those cars reached £3.07 billion [1]. Every one of those benefits has to reach HMRC somehow, and the mechanism an employer chooses decides whether it files a stack of year-end P11D forms or collects the tax in real time through each payrun. Registering to payroll benefits is the step that unlocks the second, simpler route.
Payrolling means the taxable value of a benefit is added to an employee's taxable pay every pay period, so the Income Tax is collected as the benefit is enjoyed rather than clawed back a year later through a tax code adjustment [2]. To do this for the first time, an employer historically had to register with HMRC before the tax year began, and the registration rules have changed sharply as the system moves towards mandatory payrolling.
This article explains who needs to register, the strict deadline that governs it, the online service that handles it, what changes in an employee's tax code once a benefit is payrolled, and the transition to mandatory payrolling from 6 April 2027 that removes the need to register for most benefits altogether.
Key takeaways
- Employers had to register to voluntarily payroll benefits in kind before the start of the tax year the payrolling applied to, with the deadline for the 2026-27 tax year being 5 April 2026 [3].
- Registration is done through HMRC's online payrolling benefits and expenses service, accessed with a Government Gateway user ID or GOV.UK One Login [4].
- Once a benefit is payrolled, HMRC removes it from the employee's tax code so the benefit is not taxed twice [4].
- Payrolling removes the need for a P11D on those benefits, but the employer still files a P11D(b) and pays Class 1A National Insurance [5].
- From 6 April 2027 payrolling of the most common benefits becomes mandatory, so most employers will no longer register at all, with loans and accommodation the remaining exceptions [6].
What registering to payroll benefits actually means
Registration is the formal step that tells HMRC an employer intends to tax specified benefits through the payroll rather than report them after the year on a P11D. It is not the same as simply adding a figure to a payslip. Without registration, HMRC still expects a P11D for the benefit and adjusts the employee's tax code to recover the tax, which would double up the deduction if the employer had also been payrolling it [2].
The mechanism has existed since 6 April 2016, when HMRC launched the voluntary payrolling of benefits in kind service to let employers move away from the annual P11D cycle [2]. An employer that registers chooses which benefits to payroll and for which groups of employees, and that choice then runs for the whole tax year. Running payroll accurately from that point is where an HMRC-recognised payroll platform earns its place, because the benefit value has to flow into the taxable pay figure on every Full Payment Submission.
Which benefits could be registered for payrolling
Under the voluntary regime almost every benefit in kind could be payrolled, with two long-standing exceptions. Employer-provided living accommodation and interest-free or low-interest loans (beneficial loans) could not be payrolled and still had to be reported on a P11D [2]. Company cars, car fuel, private medical insurance, gym membership and similar taxable benefits were all eligible [4].
The distinction matters because it carries through into the mandatory regime. Loans and accommodation remain outside the default mandatory payrolling and keep a separate voluntary registration route, so the exception an employer learned under the old system is the same exception that survives the reform [6].
The registration deadline that governs everything
The single hardest rule of voluntary payrolling is timing. An employer had to register before the start of the tax year in which it wanted to payroll, because HMRC would not allow registration part-way through a year [3]. For the 2026-27 tax year the deadline to register was 5 April 2026, and an employer that missed it had to keep filing P11D forms for that year and wait until the next window [3].
The table below sets out how the registration deadlines line up against the tax years they cover.
| Tax year to payroll | Registration route | Deadline to register |
|---|---|---|
| 2026-27 | Voluntary payrolling service (most benefits) | 5 April 2026 [[3]](https://www.gov.uk/government/publications/employer-bulletin-february-2026/february-2026-issue-of-the-employer-bulletin) |
| 2027-28 (most benefits) | No registration, mandatory payrolling | Not applicable [[6]](https://www.gov.uk/guidance/draft-guidance-and-legislation-to-aid-preparation-for-reporting-benefits-in-kind-in-real-time/the-phased-introduction-of-mandatory-payrolling-for-benefits-in-kind) |
| 2027-28 (loans and accommodation) | Voluntary registration, service opens November 2026 | 5 April 2027 [[6]](https://www.gov.uk/guidance/draft-guidance-and-legislation-to-aid-preparation-for-reporting-benefits-in-kind-in-real-time/the-phased-introduction-of-mandatory-payrolling-for-benefits-in-kind) |
The deadline is unforgiving because it protects the tax code mechanism. If HMRC allowed mid-year registration, an employee could be taxed on the same benefit twice in one year, once through the payroll and once through a code adjustment. Registering before 6 April lets HMRC strip the benefit out of the code cleanly from the first payrun [4].
How the online registration service worked
Registration ran through HMRC's payrolling benefits and expenses online service, which sits on the same tax platform as other employer services and uses Government Gateway or GOV.UK One Login for authentication [4]. An employer signed in, selected the benefits it wanted to payroll, and confirmed the registration ahead of the new tax year [4].
Signing in and selecting benefits
An employer needed a Government Gateway user ID enrolled for PAYE, or a GOV.UK One Login, to reach the service [4]. Inside the service the employer picked each benefit type to be payrolled, and could payroll different benefits for different groups of staff rather than being forced into an all-or-nothing choice [2]. An agent could register on an employer's behalf through the PAYE for Agents service, which mirrors the same underlying platform [4].
Telling employees before the year starts
Registration on its own is not enough. An employer that payrolls a benefit must give affected employees written notification explaining that the benefit is being payrolled, what has been payrolled, and confirming they will not be taxed twice [4]. The notification also has to state the cash equivalent of each benefit and which ones have been subject to PAYE tax, so employees can reconcile their payslips against what HMRC expects [4]. Software that produces clear, itemised payslips makes this reconciliation far easier for the employee to follow.
What happens to the tax code after registration
The most visible effect of registering is on the employee's tax code. When an employer payrolls a benefit, HMRC removes the value of that benefit from the employee's tax code, because the tax is now being collected through pay in real time [4]. HMRC notifies the employee of the code change directly, so the employee sees the adjustment reflected in their PAYE record [4].
This is the opposite of the P11D route, where the benefit stays in the tax code and the tax is recovered by reducing the tax-free Personal Allowance over the following year. Under payrolling, the taxable value is spread evenly across the pay periods in the year, so the employee pays the right tax at the right time rather than carrying a lag [2]. For a company car worth several thousand pounds, that smoothing avoids a large one-off code adjustment that could otherwise distort take-home pay for months.
Registration does not remove the Class 1A liability
A common misconception is that payrolling ends all year-end reporting. It does not. Payrolling removes the need to file a P11D for the benefits that are payrolled, but the employer still has to submit a P11D(b) after the tax year to declare and pay the Class 1A National Insurance due on those benefits [5]. Payrolling changes how the Income Tax is collected, not the National Insurance treatment [5].
Class 1A National Insurance is charged only on the employer, at 15% of the cash equivalent of the benefit for the 2026-27 tax year [7]. The P11D(b) reports the total across all benefits, whether they were payrolled or reported individually [5]. The deadlines stay fixed: the P11D(b) is due by 6 July after the tax year and the Class 1A payment by 22 July (19 July if paid by post) [8].
The table below summarises what payrolling changes and what it leaves untouched.
| Obligation | If benefit is payrolled | If benefit is on a P11D |
|---|---|---|
| Income Tax collection | Through the payroll each period [[2]](https://www.gov.uk/guidance/payrolling-tax-employees-benefits-and-expenses-through-your-payroll) | Through the tax code after the year [[2]](https://www.gov.uk/guidance/payrolling-tax-employees-benefits-and-expenses-through-your-payroll) |
| P11D for the benefit | Not required [[5]](https://www.gov.uk/guidance/how-to-complete-forms-p11d-and-p11db) | Required by 6 July [[8]](https://www.gov.uk/employer-reporting-expenses-benefits/deadlines) |
| P11D(b) for Class 1A | Still required [[5]](https://www.gov.uk/guidance/how-to-complete-forms-p11d-and-p11db) | Required by 6 July [[8]](https://www.gov.uk/employer-reporting-expenses-benefits/deadlines) |
| Class 1A payment | Still due by 22 July [[8]](https://www.gov.uk/employer-reporting-expenses-benefits/deadlines) | Due by 22 July [[8]](https://www.gov.uk/employer-reporting-expenses-benefits/deadlines) |
Missing the P11D(b) deadline carries an automatic penalty of £100 for every 50 employees for each month or part month the return is late, so payrolling does not remove the compliance pressure at year end [8].
The shift to mandatory payrolling from 6 April 2027
The registration model is being replaced. From 6 April 2027, payrolling the most common benefits in kind becomes mandatory rather than voluntary, which means employers will report Income Tax and Class 1A National Insurance on those benefits through Real Time Information as they are provided [6]. Because payrolling becomes the default, most employers will no longer register for it at all [6].
To prepare for that shift, HMRC closed the voluntary registration service after 5 April 2026, so there is no route to register mid-transition for the 2026-27 style voluntary arrangement beyond that point [3]. Employers already payrolling under the voluntary regime carry straight into the mandatory one for the benefits it covers.
What the mandatory regime keeps and drops
The reform is phased. The most common benefits are mandated from 6 April 2027, and the remaining in-scope benefits follow from April 2028 [6]. Employer-provided loans and accommodation stay outside the default because they are more complex to payroll, and they keep a voluntary registration route instead [6]. Payroll systems that already read the HMRC software-developer specifications will absorb these staged changes without the employer needing to reconfigure them by hand, which is the practical value of an HMRC-recognised payroll engine built around the specifications.
Registering for loans and accommodation from November 2026
The one registration route that survives is for the voluntary payrolling of loans and accommodation. HMRC's service to register to payroll these in the 2027-28 tax year goes live in November 2026, with a registration deadline of 5 April 2027 [6]. An employer that wants to bring these two categories into the payroll rather than keep reporting them on a P11D has to register in that window, and the same before-the-year-starts logic applies [9]. Accountants coordinating this across a portfolio of clients often manage the timing through a multi-client payroll dashboard so no scheme misses its window.
Practical steps for an employer facing the transition
An employer that already payrolls benefits should confirm which benefits are covered and check that its payroll software will handle the mandatory regime from 6 April 2027, because the reporting moves fully into Real Time Information [6]. An employer that still uses P11D forms should assume payrolling will become the norm and prepare its data now, rather than waiting for the deadline [9].
The remaining decisions concern loans and accommodation. An employer providing either should decide whether to register voluntarily from November 2026 or continue reporting them on a P11D until they are brought into scope later [6]. Whichever route it takes, the Class 1A National Insurance liability and the P11D(b) survive, so the year-end National Insurance calculation remains a fixed part of the process [5]. Businesses running payroll for the first time can start with HMRC-recognised payroll software for SMEs that already reflects the benefit-reporting rules.
Conclusion
Registering to payroll benefits was, for a decade, the gateway between the slow annual P11D cycle and real-time tax collection, governed by a single strict rule: register before the tax year begins or wait another year. The 5 April deadline, the Government Gateway service, the tax code adjustment and the surviving P11D(b) all followed from that one design choice.
That gateway is now closing for most employers. Mandatory payrolling from 6 April 2027 makes real-time benefit reporting the default and removes the registration step for the common benefits, leaving only loans and accommodation with a voluntary route from November 2026. The direction is clear: benefits in kind are being pulled into the same real-time discipline that PAYE and Real Time Information brought to ordinary pay, and the employers that adapt their payroll data early will move through the transition without a scramble.
Frequently asked questions
What was the deadline to register to payroll benefits for the 2026-27 tax year?
The deadline was 5 April 2026. HMRC did not allow registration part-way through a tax year, so an employer that wanted to payroll benefits in 2026-27 had to complete registration through the online service before 6 April 2026 [3]. An employer that missed it had to keep filing P11D forms for that year.
Do employers still need to register to payroll benefits from April 2027?
For most benefits, no. From 6 April 2027 payrolling of the most common benefits becomes mandatory, so employers report the tax and Class 1A National Insurance through Real Time Information without a separate registration [6]. The exception is employer loans and accommodation, which keep a voluntary registration route opening in November 2026.
Does payrolling benefits remove the need for a P11D(b)?
No. Payrolling removes the individual P11D for the benefits that are payrolled, but the employer still files a P11D(b) to declare and pay the Class 1A National Insurance due [5]. The P11D(b) is due by 6 July and the Class 1A payment by 22 July after the tax year [8].
What happens to an employee's tax code when a benefit is payrolled?
HMRC removes the value of the payrolled benefit from the employee's tax code, because the tax is now collected through pay in real time, and it notifies the employee of the change [4]. This prevents the benefit being taxed twice, once through the payroll and once through the code [2].
