As we approach Christmas and many employers look to pay early in December it is important to remember to report payroll correctly.
Paying early in December can have a huge impact on employees who are in receipt of Universal Credit (UC) payments if not done correctly. Employers need to make sure they report their payment date in line with HMRC guidance to avoid this.
In 2019 HMRC introduced a permanent easement on reporting PAYE information via RTI. Normally you will need to report PAYE information on or before the payment date but for those paying early in December, you will need to report the contractual payment date instead of the actual payment date.
If your normal contractual payment date would be 29 December and you will be paying early on 15 December you will need to report the payment date on the FPS as 29 December.
Example
Universal Credit is based on an assessment period each month. If you reported the actual pay date of 15 December, an employee in receipt of UC will end up with two payments in their assessment period.
If they earn more than their work allowance, this means they will lose 55p of UC for £1 they earn. In an assessment period with two pay days this could wipe out their UC.
If you report in line with HMRC guidance and use the contractual payment date on the FPS then the UC assessment period will only include one pay day which will reduce the impact on any affected employees.
For more information about Universal Credit, go to https://www.gov.uk/guidance/universal-credit-information-for-employers
Your Payroll Team Clients
At YPT we will automatically report the contractual payment date for any payrolls that pay early in December.
If you would like any help or support with your payroll requirements get in touch to see how we can help you unlock the #PowerOfPayroll.