To payroll, or not to payroll.  That decision was to be taken out of our hands, but it is now delayed until April 2027, for now - see MTD for income tax.

Practical issues which HMRC are aware of:

• Some benefits will still have to be declared annually, and not through payroll - such as Employee loans and Accommodation.
• HMRC’s guidance accepts that there are benefits of unknown value during the tax year, and therefore applying ‘reasonable estimates’ has been requested, with a top up or refund applied at year end.
• Some employees will have double tax, as they will be paying for last year with a tax code adjustment and this years benefits through payroll deductions - extensions on last years tax code changes can be applied for here, so as to spread the effect over a number of years, but the burden is on the employee to do this.  There continues to be the 50% overriding ceiling of deductions from an employee's pay.
• HMRC have waived all penalties for errors in 2026-27, unless they are deemed to be deliberate.  It is our suspicion that HMRC’s lack of ability to charge interest and penalties is the reason for the delay, and to prevent further delay they have waived them for 12 months.

Time will tell if HMRC finds a way to penalise errors, or if further delays will come.

As advisers, we’re largely in favour of the change, but only if the system is fit for purpose. Monthly recurring work, with contemporaneous records, is always preferable to one off work looking backwards more than 12 months.  Clients are also usually more accommodating of their invoices reflecting the work which is actually being done in the month.

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