HMRC has changed the timetable for mandatory payrolling of benefits in kind, and company cars are now firmly in the first wave.
From 6 April 2027, phase one of mandatory payrolling is expected to apply to company cars, car fuel, vans, van fuel and employer-provided medical benefits. Most other benefits are now expected to follow from April 2028.
That might sound like payroll software news rather than driver news. But if you drive an electric company car, a salary sacrifice EV, a pool car, or a company van, the practical takeaway is simple: vehicle, fuel, charging and mileage information will need to be cleaner, earlier and easier to explain.
What HMRC has changed
Mandatory payrolling means employers report taxable benefits through payroll using Real Time Information, instead of relying mainly on end-of-year P11D reporting for those benefits.
HMRC had been working towards a broad April 2027 change. The latest update makes the rollout more staged:
- Phase one from 6 April 2027: company cars, car fuel, vans, van fuel and employer-provided medical benefits.
- Phase two from April 2028: most other benefits in kind.
- Loans and accommodation: expected to remain voluntary for now.
For EV drivers, the important part is that company cars and company car fuel are not waiting until 2028. They are in the first wave.
Why this matters for electric company cars
An EV company car can involve several moving parts: the car's list price, availability dates, Benefit in Kind value, salary sacrifice arrangements, charging arrangements, reimbursement policy and any private-use rules.
HMRC's existing car benefit payrolling guidance already lists the kind of car data employers may need to send, including make and model, first registration date, CO2 emissions, fuel type, car identifier, calculated price, availability dates and cash equivalent or relevant amount.
That is not a mileage log in itself. But once reporting becomes more real-time, messy vehicle records become harder to leave until year end. If a car changes hands, a benefit value changes, free fuel is provided or withdrawn, or a driver leaves, payroll needs the right information quickly.
Where mileage records fit in
Benefit in Kind tax is not normally calculated from your business mileage. A company car benefit is based on the taxable value of the benefit, not on how many client visits you made last month.
Even so, mileage records still matter because they support the parts of company EV use that sit around the taxable benefit:
- Business mileage claims, where your employer reimburses work journeys.
- Home vs public charging records, especially where company car reimbursement follows HMRC advisory electricity rates.
- Private-use questions, where a company policy needs clear separation between work and personal journeys.
- Pool car or shared vehicle use, where several drivers may use the same EV.
- Leavers and vehicle swaps, where availability dates and final mileage need to line up.
In other words, payroll may not ask for every journey, but clean journey records make the surrounding admin much easier to prove.
The salary sacrifice angle
Many UK EV company cars are provided through salary sacrifice. HMRC's car benefit guidance refers to the "relevant amount" where an employee gives up salary to receive a benefit such as a company car.
That makes timing important. If you order, change or return a salary sacrifice EV around a payroll cut-off, the benefit information has to match reality: when the car was actually available, whether fuel or charging support was provided, and whether any employee contribution or earnings foregone figure changed.
A mileage app will not replace payroll or fleet records. It will, however, give drivers and employers a cleaner view of business use, charging context and handover mileage when those payroll questions come up.
What EV drivers should start recording now
The change is not live until April 2027, so this is not a panic job. It is a tidy-up job.
If you use a company EV for work, aim to keep these basics in one place:
- Journey date and whether the trip was business, commuting or personal.
- Start and end locations, or enough detail to identify the journey later.
- Business purpose, such as client visit, site inspection or supplier meeting.
- Mileage for the trip, plus odometer readings where your employer asks for them.
- Charging context, especially if work mileage was supported by public charging rather than home charging.
- Vehicle changes, including the date you received, swapped or returned a company car.
That is the same sort of record that already helps with expenses. The difference is that real-time benefits reporting gives employers less room for annual clean-up.
What small businesses and employers should check
If you run a small business with one or two company EVs, the risk is not usually a complicated fleet system. It is gaps between payroll, accounts, expenses and the person actually driving the car.
Before April 2027, it is worth agreeing:
- who tells payroll when a car is provided, swapped or returned
- how quickly free fuel or charging support changes are reported
- where business mileage claims are stored
- whether drivers need to tag home charging, public charging or mixed charging
- how shared EVs or pool vehicles are logged
- how corrections will be handled if a benefit value changes mid-year
None of that needs to be over-engineered. It just needs to be boringly reliable.
How this differs from BiK rate changes
This is not another article about the 2026/27 electric company car BiK percentage. The rate still matters, of course, but the new issue is operational: when and how company car benefits are reported.
The existing question for many drivers is, "how much company car tax will I pay?" The 2027 question for employers and drivers is also, "is the information clean enough to report through payroll during the year?"
That is why mileage and charging records belong in the conversation. They may not set the BiK percentage, but they help explain the real-world use of the vehicle around expenses, reimbursement and policy checks.
Practical takeaway
If you drive a company EV, start treating mileage records as part of your payroll hygiene, not just an expenses chore.
By April 2027, the drivers and employers who have clear records for journeys, charging context, vehicle availability and business use will have a much easier time than those trying to reconstruct everything from emails, calendar entries and vague memories. That is nobody's idea of a good afternoon.
Sources
- GOV.UK: The phased introduction of mandatory payrolling for benefits in kind
- GOV.UK: The default operation of mandatory payrolling
- GOV.UK: Sending car data to HMRC, payrolling car benefit and car fuel benefit
- ICAEW: Plans for mandatory payrolling of benefits in kind revised
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