18th November 2019
Christmas comes but once a year runs the saying; but with the Christmas lights going on across Devon and Christmas adverts hitting the airwaves it seems as though that ‘once’ can last for some time. Nevertheless, amidst the whirlwind of present buying and party organising there are some things which will run more smoothly with a little advanced planning.
One of these is the December payroll run. Some businesses may decide to pay their employees early for Christmas. Others may look to pay on the normal date but find that their plans are affected by bank holidays or by employee holidays. Either way, early planning and preparation can make a measurable difference to ensuring a timely and accurate payment run.
Businesses which choose to pay early for Christmas also have to bear in mind the potential effect of an early payment on Universal Credit calculations. Two payments within the same month could lead to the Universal Credit system erroneously assuming that individuals have received a pay rise and therefore cut future payments.
Recognising this, HMRC have issued guidance for employers who pay early for Christmas. These guidelines set out in the October 2019 Employer Bulletin state that even if payments are made early, employers should report the payment date as being in line with normal monthly salary payment dates. Their example states that:
“if you pay on Friday 20 December 2019 but the normal/contractual payment date is Tuesday 31 December 2019, please report the payment date on the FPS as 31 December and ensure the submission is sent on or before 31 December.”
By reporting in this way, employers can help to protect their employees’ eligibility for Universal Credit whilst at the same time offering an early pay day in the run up to Christmas. The same rules apply in respect of bank holiday payments. So, if the normal payment day is the 26th but in the light of Christmas and Boxing Day bank holidays payments are made on Tuesday 24th the reporting day should still be 26th.
Thompson Jenner’s Payroll Manager Samantha Cole commented “The advice from HMRC recognises the interplay between payment dates and Universal Credit and provides a working solution. However, the importance of early planning cannot be underestimated and we would therefore look to work with our payroll clients in order that we can receive and process payroll information as early as possible in the payroll cycle.”