HMRC has announced a significant concession for employers with internationally mobile workforces, confirming that qualifying globally mobile employees (GMEs) may be excluded from the new mandatory payrolling of benefits regime. The announcement, published in HMRC’s 2026 communications regarding the implementation of mandatory payrolling, recognises the practical difficulties that arise when reporting benefits provided to expatriate employees in real time.
For many multinational employers, this will be a welcome development, helping to preserve existing compliance processes for expatriate populations while the wider mandatory payrolling framework is introduced.
HMRC has acknowledged that globally mobile employees often present unique challenges that distinguish them from domestically employed workers. In particular, employers may not have complete information regarding the value of benefits until several months after the end of the tax year.
To address these concerns, employers will be able to elect to exclude qualifying globally mobile employees from mandatory payrolling and instead continue reporting benefits through the traditional year-end P11D and P11D(b) process. HMRC has indicated that a dedicated service will be introduced to facilitate these elections.
Although detailed guidance is still awaited, the announcement reflects HMRC’s recognition that expatriate populations often require a different compliance approach.
Why are expatriate benefits different?
Employees assigned to the UK commonly receive a wide range of benefits and allowances designed to facilitate their assignment. These may include:
- Employer-provided accommodation;
- Utilities and household expenses;
- School fees;
- Relocation assistance;
- Home leave travel;
- Tax return preparation support;
- Cost-of-living allowances;
- Tax equalisation or tax protection arrangements;
- Employer-provided vehicles; and
- Benefits funded or recharged through overseas group companies.
In many cases, the final taxable value of these benefits cannot be accurately established during the tax year itself.
Practical implications
For employers with significant expatriate populations, the announcement is likely to reduce compliance risk and administrative burden.
Mandatory payrolling is designed around the notion that benefit values can be calculated and reported accurately throughout the tax year. However, for many international assignments, the underlying costs are often not known until considerably later. The ability to continue using annual reporting for qualifying globally mobile employees should therefore provide employers with greater certainty and flexibility while maintaining compliance with UK employment tax obligations.
Looking ahead
Further HMRC guidance is expected to clarify:
- The definition of a globally mobile employee;
- Eligibility criteria for exclusion;
- The election process;
- Administrative requirements; and
- Any interaction with existing expatriate payroll arrangements.
Until then, employers with internationally mobile workforces should begin reviewing their assignment populations and prepare for the implementation of mandatory payrolling from April 2027.
The announcement represents a pragmatic acknowledgement by HMRC that expatriate taxation often involves complexities which do not lend themselves easily to real-time payroll reporting. For many employers, the ability to continue using the established P11D framework for globally mobile employees will be one of the most significant aspects of the mandatory payrolling reforms.
