Benefit payrolling rules clarified for overseas employees
HMRC has confirmed how employers should handle benefits in kind for globally mobile staff. The clarification arrives ahead of mandatory payrolling, which begins in April 2027. In short, benefit payrolling rules clarified for overseas employees now give businesses a welcome choice.
What is changing from April 2027
Currently, many employers report benefits on annual P11D forms. However, that approach is being phased out. From 6 April 2027, most benefits in kind must go through payroll instead.
The first phase covers a defined group of benefits:
- Company cars
- Company vans
- Fuel
- Medical benefits
Other benefits will generally follow from 6 April 2028. Nevertheless, two important exceptions remain. Employers cannot payroll beneficial loans or employer-provided accommodation under the mandatory rules. Instead, payrolling these benefits stays entirely voluntary.
The exclusion for globally mobile employees
HMRC has now confirmed a helpful concession. Employers may choose to exclude globally mobile employees from mandatory payrolling from 6 April 2027. Consequently, those employees can stay outside the new system.
A new online service should launch in November 2026. Employers will use it to register that choice. Where you exclude globally mobile employees, continue with existing year-end reporting. That means you still complete forms P11D and P11D(b) as before.
Why HMRC made the change
This concession reflects genuine practical difficulties. Calculating benefits becomes complex when employees work across several countries. Similarly, complications arise when someone moves partway through a tax year. Therefore, HMRC has allowed flexibility rather than forcing a single approach. Further detailed guidance is expected later this year.
What employers should do now
Do not leave this until 2027. Instead, start reviewing your arrangements early. Identify which employees count as globally mobile. Then consider whether excluding them would genuinely simplify your reporting. Finally, make sure your payroll software and processes are ready.
Talk to us
Are you confident your payroll is prepared? With benefit payrolling rules clarified for overseas employees, now is the ideal time to review. Contact our team today and we will guide you through the changes.
