Here’s what you need to know if paying staff early this Christmas!
As we get closer to the festivities, we would like to remind employers of the permanent easement on reporting PAYE Information in real time that came into place in 2019. Many employers like to pay their employees earlier than usual during the festive period. There are a number of reasons for this. For example, the business may close for Christmas, meaning workers need to be paid earlier than normal. But if you get the dates wrong on the electronic submissions made to HMRC, it could hit employees on Universal Credit hard.
Important information for Employees who claim Universal Credit
If you do pay early due to the Christmas period, you will need to report your usual (or contractual) payday as the payment date on your Full Payment Submission (FPS). As well as ensuring that the FPS is submitted on or before this date. For example, if you pay on Friday 17th December 2021 but the contractual pay date is Friday 31st December 2021, report the payment date on the FPS as the 31st December and ensure that the submission is sent on or before 31st December 2021.
Reporting the wrong pay period would then inflate the perceived wages of an employee and possibly reduce universal credit support from the government by as much as 55%. Not exactly the Christmas present your employee would want.
If you need guidance from HMRC you can follow this link: https://www.gov.uk/running-payroll/reporting-to-hmrc. If this process if followed, the issue of double monthly earnings in one assessment period for Universal Credit can be avoided.
By doing this, it will protect your employees’ eligibility for Universal Credit. This is because reporting the payday as the payment date may affect current and future entitlements.
The overriding of PAYE reporting obligation for employers is unaffected by this easement and you still must report payments on or before the date the employee is paid, that is payday.
So what does this all mean?
- This is only for employees on Universal Credit
- If you are paying your employees early, make sure that the FPS is submitted with the contractual pay date and not the day you pay your staff.
- If you submit a different contractual pay date you could cause issues for your employees who are on Universal Credit as it would create double monthly earnings in one assessment period.
- If an employee ends up having double monthly earnings in one assessment period, they could potentially lose out on all their Universal Credit for that month.