Christmas payroll: everything you need to know 

Christmas and New Year are nearly here, so now is a great time to discuss what employers need to be aware of when running their Christmas payroll over the festive period.

December is a busy month for payroll as many employers choose to change their payment date so that employees get paid before Christmas. Even if the employer keeps their same payment date, they may need to run their payroll early due to the festive period bank holidays.

In this blog, we’ll highlight some top tips for running your Christmas payroll.

Pros and cons of an early December pay date

December is an expensive month for a lot of people, with buying Christmas presents, festive social events, travel and family get-togethers. It can be beneficial for employees to receive their wages early in the month to give their finances a boost at this busy time. 

This does however mean a longer wait between December and January pay dates, which could result in minor financial issues if an employee hasn’t budgeted correctly.

Paying staff early

When paying employees early in the month, it’s important to use the normal payment date when submitting your Full Payment Submission (FPS) to HMRC, as changing this date can affect the processing of Universal Credit. This means the actual pay day will differ from the payment date noted in the payroll system, but it ensures there are no negative impacts to an employee’s Universal Credit entitlement.

For example, if your normal payment date was the 28^th of each month but you decided to pay employees on the 20^th December, the date to use for the pay run would still be 28^th December 2025.

Employers have until the normal payment date (the date set for the pay run) to submit the FPS, and until the 19th of the following month (January 2026) to send an Employer Payment Summary (EPS) to HMRC.

Communicating to staff

It is important to ensure your employees are notified in advance of their early payment date, so they can budget accordingly.

You may be able to add a note to their November payslip advising of the early pay date the following month.

Bank holidays and Bacs dates

Christmas Day, Boxing Day, and New Year’s Day are all bank holidays this festive season. This affects all employers who pay via bank transfer, but particularly affects employers who pay via Bacs (Bankers’ Automated Clearing System) as payments need to be sent two working days prior to the payment date.

If you pay your employees by Bacs, here are the key dates for sending salaries to Bacs over the festive period this year:

A note on Christmas bonuses and gifts

Any Christmas bonuses given are considered as earnings. They should always be run through the payroll because they’re subject to tax and national insurance.

Any gifts given need to meet the ‘trivial benefit’ criteria outlined by HMRC:

• The gift should cost £50 or less
• It isn’t cash or a cash voucher
• It isn’t a reward for their work or performance
• It isn’t in the terms of their contract

Tax must be applied on any benefits that do not meet these criteria

For more information about tax exemptions available to employers throughout the festive period, read our blog here.

How can we help with your Christmas payroll?

Our Payroll team are always happy to help with any queries on running your Christmas payroll. If you need help or have any questions please get in touch at payroll@ct.me