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HM Revenue & Customs (HMRC) has announced that from April 2026, it will be mandatory to report employment benefits through payroll software. This forms another part of HMRC’s plan to move to a fully digitised tax authority.  

This change will reduce administrative burdens for thousands of employers, as well as HMRC, by simplifying and digitising the reporting and paying of tax on employment benefits.  

The timetable is tight with just over two years to develop the software and conduct testing before the reporting rules come into force. 

HMRC confirmed it will engage with stakeholders to discuss the proposals. This should help to “inform design and delivery decisions, and draft legislation will be published later in the year as part of the usual tax legislation process”.

HMRC will also connect with industry experts to produce guidance, which will be made available in advance of 2026. 

Further information from HMRC is expected to be published via its usual communication routes, such as employer bulletins.

Date published 25 Jan 2024

Catherine Heinen, FCCA

Catherine is a Technical Content Writer at TaxAssist Accountants, and a qualified accountant. With experience working at two accountancy practices in the UK top 50 accountancy firms according to Accountancy Age, Catherine has significant experience in accounts, tax returns and advising clients. Catherine ensures businesses, business owners and individuals are kept up to date and informed by providing concise and informative technical material.

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