The House of Lords is seeking views from employers and other interested parties on the Government’s plans to introduce mandatory real-time reporting of benefits in kind, including company cars, vans and fuel.
The consultation forms part of the House of Lords Finance Bill Sub-Committee’s examination of the draft Finance Bill 2026-27 and comes ahead of significant changes to the way employers report benefits provided to employees.
Under the proposed system, businesses will move away from the traditional end-of-year reporting process for many benefits in kind and instead provide the relevant information through payroll using Real Time Information (RTI).
For businesses operating company vehicles, the changes could have a direct impact on how taxable benefits are calculated, recorded and reported. This makes understanding Benefit-in-Kind (BIK) tax increasingly important for employers and fleet managers.
Benefits-In-Kind Reporting To Move Into Real Time
The Government has already confirmed plans to change the way benefits in kind are reported from April 2027.
For most employers providing company cars, vans, car or van fuel and medical benefits, the current P11D process will eventually be replaced by mandatory payrolling. Fuel is also part of the wider benefits-in-kind picture, with HMRC advisory fuel rates providing the figures employers use when calculating certain company vehicle benefits. Our guide to the new HMRC Advisory Fuel Rates from September 2026 covers the latest rates.
Rather than waiting until after the end of the tax year to report the benefit, employers will need to calculate the relevant taxable amount during the year and include it in their payroll reporting.
The new approach is intended to bring benefits-in-kind reporting more closely into the existing PAYE system and provide HMRC with information on benefits as they are provided. The underlying tax position remains an important consideration for employers choosing vehicles for staff. Businesses running plug-in hybrid vehicles, for example, can also refer to our guide to PHEV BIK rates in 2026 when assessing the tax implications of different company car options.
For employers operating company car or van fleets, this represents a significant change to the administration surrounding employee vehicles. Businesses reviewing their wider vehicle arrangements may also benefit from understanding the different business vehicle finance options available when providing vehicles to employees.
The underlying tax position remains an important consideration for employers choosing vehicles for staff. Businesses operating electric company cars or vans can also use the HMRC AER Reimbursement Calculator to compare estimated charging costs with the applicable HMRC Advisory Electric Rate.
House Of Lords To Examine The Practical Impact
The Finance Bill Sub-Committee is now asking employers and other stakeholders to provide evidence on how workable the proposed changes will be in practice.
Among the issues being considered is whether businesses will find it straightforward to report benefits in kind through RTI and whether employers of different sizes are adequately prepared for the transition.
The committee is also interested in the level of support businesses may require from HMRC before the new arrangements come into force. HMRC already publishes data relating to company car drivers, providing a useful indication of the scale and distribution of taxable company vehicle benefits across the UK.
This could be particularly relevant for businesses that have employees receiving vehicles or other taxable benefits, where payroll teams will need to ensure information is accurate and updated throughout the tax year.
For companies operating multiple vehicles, these changes also sit alongside wider fleet administration. A structured approach to vehicle provision, replacement cycles and employee vehicle management can form part of a broader fleet management solution for UK businesses.
Will The Changes Increase Or Reduce Administration?
One of the key questions being put to employers is how the new reporting arrangements will affect their administrative workload once they are fully implemented. Employers also need to distinguish benefits-in-kind reporting from mileage reimbursement, with HMRC maintaining separate rules and rates for business mileage.
The committee wants to establish whether mandatory payrolling will ultimately simplify the process or create additional work for businesses.
It is also looking at whether the administrative impact will be different for employers that continue to use P11Ds for benefits that are not immediately brought within the mandatory payrolling system.
For businesses providing leased vehicles to employees, the tax position is only one part of the overall cost calculation. Employers may also need to consider factors such as contract structure, mileage, maintenance and vehicle running costs when reviewing their business car leasing arrangements. Vehicle choice can also make a substantial difference to the tax position. Our analysis of how the Range Rover Electric can offer a major BIK saving compared with a PHEV highlights how differences in vehicle powertrain can affect the benefit provided to an employee.
Two Key Dates For Employers
The Government’s proposed timetable would see mandatory reporting through RTI introduced from April 2027, followed by a further expansion from April 2028.
From April 2027, most employers providing relevant benefits, including company cars, vans and associated fuel, are expected to move to real-time reporting rather than relying on the existing year-end P11D process.
From April 2028, mandatory payrolling is proposed for most remaining benefits in kind, although employer-provided loans and accommodation are currently excluded from this requirement.
The committee is specifically asking whether these implementation dates are achievable and whether HMRC’s estimates of the costs businesses will face are realistic.
The changes are particularly relevant for businesses considering how company vehicles fit into their wider employee benefits and fleet strategies. For businesses looking at alternatives to traditional vehicle ownership, business contract hire provides one option for obtaining vehicles without purchasing them outright.
Employers Can Submit Evidence
The House of Lords Finance Bill Sub-Committee is inviting written evidence on the proposed changes, giving businesses the opportunity to explain how the reforms could affect their own operations.
It is particularly interested in evidence covering:
- How straightforward the move to RTI reporting is expected to be.
- How prepared employers are for the proposed changes.
- What additional guidance or support may be required from HMRC.
- The likely impact on businesses’ administrative workload.
- The implications for employers continuing to use P11Ds for certain benefits.
- Whether the proposed April 2027 and April 2028 implementation dates are realistic.
- Whether HMRC’s estimated compliance costs accurately reflect the burden on businesses.
The deadline for written submissions is 5 pm on Sunday, October 11, 2026.
The inquiry provides employers with an opportunity to highlight practical issues before the new reporting arrangements are introduced, particularly where businesses expect changes to payroll processes, fleet administration or the way company vehicles are handled as employee benefits.
Call our expert team on 
