What you need to know about paying staff early for Christmas

What you need to know about paying staff early for Christmas

HMRC has issued guidance to employers about their Real Time Information (RTI) obligations when paying staff early for Christmas.

Many businesses pay staff their monthly and weekly salaries and holiday pay ahead of the festive break. Employees who are eligible for Universal Credit could have their entitlement affected if employers incorrectly report the early payment.

Paying staff early for Christmas

In the RTI full payment submission in field 43, you must leave the normal contractual payment date. For example, if you normally pay employees on December 31st but paying on the 17th, the payment date must remain the 31st.

For weekly-paid employees the normal weekly RTI FPS should be submitted for each week over the holiday period. This includes the entitlement to holiday pay even if you pay it in advance.

Accounting software programs allow you to override payment dates for BACS purposes, but you should ensure this is reviewed prior to submission. If you fail to do so, it will mean Universal Credit payments will stop for those who are currently in receipt. As a result, they could face financial issues over Christmas.

Employers have flexibility in filling their RTI and in December you can submit the full payment submission file on or before the contractual payment date.

Paying staff electronically

If paying employees via faster payment, these can be initiated anytime, depending on your bank or building society.  Your employees’ banks may not process payments on non-banking days, however. So, paying a day earlier ensures the funds will be received correctly.

Remember that there are a number of bank holidays in addition to the usual festive holidays due to them falling on a weekend. BACS payments may also be delayed by the bank as a result. Don’t forget to take this into account.

Christmas bonuses and gifts

After such a difficult couple of years, rewarding employees with bonuses can be a big boost for staff. Remember, however, that this creates extra work for you because each payment will have tax and National Insurance implications. Be aware and ensure you observe the rules to avoid penalties and fines.

If you are unsure about any aspect of payroll payments over Christmas or at any other time of year, then please contact the team at Guidon Group.