HMRC’s Payrolling Benefits in Kind (PBiK) service provides a way to reduce your employer admin by payrolling taxable benefits.
Now is the ideal time for employers to prepare for PBiK before it becomes compulsory in April 2027.
What is PBiK?
As a UK employer, one of your obligations is to submit P11D forms for your employees each year. These tell HMRC if the employee gets taxable benefits in kind (e.g. company car, private medical insurance, interest-free loan).
Under PBiK, these benefits are ‘payrolled’. Instead of using P11D forms, you would add the cash equivalent of the employee’s benefit to their taxable pay and then tax them through your payroll, with the appropriate tax being deducted via PAYE. HMRC ensure that the value of the benefit is not included in the employee’s tax codes.
When does PBiK come into effect?
Some companies moved voluntarily to PBiK for the 2026/27 tax year. From 6 April 2027 (i.e. the 2027/28 tax year), PBiK will be mandatory for UK employers.
Unfortunately, PBiK cannot be applied to annual director payrolls just yet.
What are the advantages of PBiK?
- Reduced administration: PBiK removes the need to complete P11D forms at the end of the tax year
- Employees taxed in real time: employees pay the correct amount of tax throughout the year, avoiding large, unexpected tax bills or tax code adjustments later
- Transparency: employees have greater visibility of their benefits and the associated tax on their payslips
How we can help
The payroll team at BKL are ready to help clients stay ahead: guiding them through the initial setup and a smooth transition to their new processes by the mandatory deadline (5 April 2027).
For a chat about how we can help you, or to find out more about PBiK, please get in touch withGary silver using the form below or your usual payroll contact at BKL.
This insight was updated on 24 June 2026
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Frequently Asked Questions: Payrolling Benefits in Kind (PBiK)
What is Payrolling Benefits in Kind (PBiK)?
PBiK is an HMRC service that allows employers to tax employee benefits directly through payroll instead of completing annual P11D forms. The cash equivalent of the benefit is added to the employee’s taxable pay, and tax is collected in real time through PAYE.
Which benefits can be payrolled?
Common taxable benefits such as company cars, private medical insurance, and interestfree loans can be processed through PBiK. (Standard HMRC exclusions still apply.)
Is PBiK mandatory?
PBiK becomes mandatory from 6 April 2027 for all UK employers.
It will be mandatory to report:
- Company cars and fuel (including electric vehicle schemes)
- Vans and fuel
- Private medical benefits
What are the benefits of PBiK?
- No more end-of-year P11D forms
- Employees are taxed accurately throughout the year, reducing unexpected bills
- Employees can clearly see benefits and related tax on their payslips
