It’s the season of goodwill, but payroll can be a headache at Christmas and New Year.
Both Christmas Day and New Year’s Day fall on a Sunday, so many employers will need to bring forward the normal pay date to compensate for any shutdown over the holiday period.
What employers should be aware of
The pay date on the Full Payment Submission (FPS) should still show the normal contractual (regular) pay date, even if your company payday is brought forward in December.
Submission of the Employer Payroll Summary (EPS) should be as per the standard timetable for this.
EPS is one of the submissions you complete as part of Real Time Information (RTI). It’s needed if no employees were paid in the reporting period, or if you want to claim any payments or reclaim deductions such as your employment allowance.
Reporting in this way will help protect your employees’ eligibility for Universal Credit, because reporting a payment earlier than usual could cause their payment to be reduced or even stopped. Think of when you need to generate your Bacs file ahead of an early payday if you’re paying salaries by Bacs payment.
Bonuses and gifts
Businesses may choose to offer gifts to their employees or host a Christmas party in December.
For a party or event to be exempt from tax and National Insurance, it must be:
HMRC says any cash you give to employees as a Christmas bonus counts as earnings, so you’ll need to:
Christmas bonuses in the form of money are subject to tax and National Insurance through the payroll, so gifts and vouchers may have tax and National Insurance obligations provided they are not classified as trivial.
In order for vouchers or gifts to be trivial, they need to be all of the following:
Need help with your festive payroll? Please contact us.
