Generally, yes — if your payroll can handle it. Payrolling becomes mandatory from April 2027, and registering voluntarily for 2026–27 means you drop P11Ds a year early, iron out problems while they're optional, and your employees meet the deduction gradually. You must register with HMRC before the start of the tax year you want payrolling to begin in.
- ✓Payrolling benefits in kind becomes mandatory from April 2027.
- ✓Register online with HMRC before 6 April for the tax year you want to start.
- ✓Voluntary payrolling ends P11D forms for those benefits — but P11D(b) and Class 1A NIC remain.
The deadline that makes this decision timely
From April 2027, reporting most benefits in kind — including private medical insurance — through payroll becomes mandatory. The P11D route that employers have used for decades is being retired for payrolled benefits, and tax on benefits will be collected in real time through PAYE instead of via tax-code adjustments a year or more behind. Our payrolling 2027 guide covers the change itself in full.
What's less well known is that payrolling has been available voluntarily for years. Any employer can register with HMRC now and start payrolling from the next tax year — which means the real question isn't whether you'll payroll your health insurance benefit, but whether you switch on your own timetable in 2026–27 or alongside everyone else when it becomes compulsory.
| Route | Register by | First payrolled year | P11Ds for that benefit |
|---|---|---|---|
| Voluntary, early | Before 6 April 2026 | 2026–27 | None from 2026–27 |
| With the mandate | Before 6 April 2027 | 2027–28 | None from 2027–28 |
| Do nothing | — | Payrolling still required from April 2027 | Filed until 2026–27, then compressed setup |
The case for going early
The strongest argument is simple: this change is coming anyway, and voluntary adoption lets you make it on easy terms rather than under deadline pressure alongside every other employer in the country.
- No more P11Ds for payrolled benefits. Once a benefit is payrolled, you stop producing P11D forms for it — one less July deadline, one less late-filing penalty risk.
- A practice year. Software glitches, benefit-valuation questions and process gaps surface while payrolling is still optional, with time to fix them calmly.
- Cleaner for employees. Tax is collected in-year on the actual benefit value, so employees stop getting surprise tax-code adjustments for a benefit year that ended months ago.
- Simpler joiners and leavers. Benefit values are prorated through payroll as people come and go, instead of being reconciled after year-end.
- First pick of support. Payroll bureaus and software providers will be swamped in the run-up to April 2027; early movers get attention that late movers won't.
For a typical scheme — a stable group of employees, a known annual premium per head — private medical insurance is one of the easier benefits to payroll, which makes it a sensible candidate for a first-year trial even if you leave other benefits on P11D for now.
The honest case against — and who should wait
Early adoption isn't free. There's setup work: checking your payroll software supports payrolling, deciding which benefits to include, calculating cash equivalents in advance and building the per-period deduction into each payslip. If you outsource payroll, your bureau may charge for the change.
The bigger job is employee communications. In the first payrolled year, employees see their take-home pay dip slightly as the benefit starts being taxed in-year — and some will simultaneously still be repaying the previous year's benefit through an old tax-code adjustment. That overlap is normal transition mechanics, not double taxation of the same benefit, but it looks alarming on a payslip and generates questions. Employers who go early without explaining it spend the saved P11D time fielding queries instead.
Sort the scheme before you sort the payroll
How to register with HMRC
Registration is done online through HMRC's payrolling benefits and expenses service, using your Government Gateway account. The steps:
- Check your payroll software (or ask your bureau) confirms it supports payrolling benefits and reports the values through Full Payment Submissions.
- Register online via HMRC's payrolling employees taxable benefits and expenses service — before 6 April of the tax year you want to start.
- Choose which benefits and employees to payroll. You can payroll some benefits and not others; medical insurance is a common first choice.
- Calculate the cash equivalent of each employee's benefit for the year — for PMI, typically their share of the premium — and divide it across pay periods.
- Tell your employees before the first affected payday what's changing, what they'll see on their payslip and why their tax code will change.
- Run it each period, adjusting values for joiners, leavers and mid-year premium changes.
HMRC then removes the benefit from affected employees' tax codes so it isn't taxed twice. Note what doesn't change: you still file a P11D(b) and pay Class 1A NIC at 15% on the benefit value — payrolling changes how employees' income tax is collected, not the employer's NIC bill. See our Class 1A NIC guide.
Making the transition year go smoothly
Most transition pain is communication pain, so front-load it. A short note before the first affected payday should cover: the benefit is not changing and costs employees nothing more overall; tax on it will now be collected each payday instead of through next year's tax code; take-home pay will dip slightly from month one; and anyone still repaying last year's benefit through their old tax code may briefly see both effects at once before codes settle.
Practically: reconcile your benefit register against the insurer's membership list before you start (errors are far easier to fix before they hit payslips), decide how you'll handle mid-year premium changes at renewal, and brief whoever answers payroll queries. Get the first year right and mandatory 2027 becomes a non-event — you'll already be running the system everyone else is scrambling to adopt. For the P11D process you're leaving behind, see our P11D deadlines guide.
Frequently asked questions
Should I register to payroll benefits before it's mandatory in 2027?
Generally yes, if your payroll software supports it and you can run decent employee comms. A voluntary year lets you fix problems while stakes are low, drops P11Ds early and beats the rush on payroll-bureau support before April 2027. Wait if you're mid-payroll-migration or lack bandwidth this year.
When is the deadline to register for voluntary payrolling?
Before the start of the tax year you want payrolling to begin in — so before 6 April 2026 for the 2026–27 tax year. You can't join mid-year: if you miss the cutoff, you continue P11D reporting for that year and start payrolling the following April.
How do I register with HMRC to payroll benefits early?
Online, through HMRC's payrolling employees taxable benefits and expenses service, using your Government Gateway account. You select which benefits and employees to payroll, and HMRC adjusts affected tax codes so the benefit isn't taxed twice. Register before 6 April of your chosen start year.
Does voluntary payrolling mean no more P11D forms?
For payrolled benefits, yes — no P11D is needed for a benefit reported through payroll. But you must still file the annual P11D(b) return and pay Class 1A NIC at 15% on benefit values. Payrolling changes how employees' income tax is collected, not the employer's NIC obligations.
Can I payroll health insurance but keep other benefits on P11D?
Yes. Voluntary payrolling is benefit-by-benefit: many employers start with private medical insurance because its value is predictable — each employee's share of a known premium — and keep messier benefits on P11D until mandatory payrolling arrives in April 2027.
Will employees pay more tax if we payroll benefits early?
No — the same benefit attracts the same tax either way. What changes is timing: tax is collected in-year through each payslip rather than a year behind via tax-code adjustment. Take-home pay dips slightly from the first payrolled month, but employees stop getting retrospective tax-code surprises.
Why might employees see a double deduction in the first payrolling year?
During transition, an employee can be paying tax on the current year's benefit through payroll while their old tax code is still collecting tax owed on the previous year's benefit. It's two different years' benefit being settled at once, not double taxation — but explain it before payday, because it looks wrong on a payslip.
What do I tell employees before we start payrolling the health insurance benefit?
Four things, before the first affected payday: the benefit itself isn't changing; tax on it will now be collected each payday; their tax code will change and take-home pay will dip slightly; and any overlap with last year's tax-code adjustment is temporary. A short written note plus a named contact handles most queries.
What happens if I don't register early — just wait for April 2027?
Nothing bad, provided you're ready by then: you keep filing P11Ds until payrolling becomes mandatory. The risks of waiting are practical — a compressed setup alongside every other employer, stretched payroll-bureau support and no low-stakes practice year — rather than any penalty for not volunteering.