What do I need to know if I pay my staff early at Christmas?

HMRC is aware that when staff are paid early it can cause problems for staff who make Universal Credit claims. This is because reporting the payday as the payment date can impact on current and future benefit entitlements.

In 2019, HMRC introduced a permanent easement so if you pay staff early over Christmas, you can report your normal (or contractual) payday as the payment date on your Full Payment Submission (FPS). You must make sure that the FPS is submitted on or before this date.

HMRC illustrate this with an example:

If you pay your staff on Friday 16th December 2022, but the normal (or contractual) payment date is Friday 30th December 2022, report the payment date on the FPS as 30th December and make sure the submission is sent on or before 30th December.

By taking advantage of the HMRC easement, you can help protect your employees’ benefit position.

HMRC points out that the overriding PAYE reporting obligation for employers is unaffected by this easement so must report payments on or before the date the employee is paid.

If the above applies to your business, there is still time to plan ahead before paying your staff over Christmas.

At TaxAssist Accountants we can oversee your payroll processes, costs, calculations and deadlines to take care of everything for your business. We use HMRC and RTI compliant payroll software that helps firms fulfil all their payroll duties and obligations.

Date published 3 Nov 2022 | Last updated 20 Mar 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.