With Christmas and New Year fast approaching, now is a great time to discuss what employers need to be aware of when running payroll over the festive period.
December is a busy month for payroll because 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.
Bank holidays
Christmas Day, Boxing Day, and New Year’s Day are the 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) because payments need to be sent two working days prior to the payment date.
For example, if an employer usually pays on the 27th of December, the payments would need to be sent to BACS on 21st of December to account for the bank holidays and weekend.
Universal credit
Payroll processing dates can affect the processing of Universal Credit. To avoid this, it’s essential that an employer reports the normal payment date to HMRC at Christmas, even if employees are paid earlier. This means the pay day and payment date will be different. However, this will ensure there are no negative impacts to an employee’s Universal Credit entitlement.
FPS and EPS submissions
Employers have until the ‘normal payment date’ to submit the Full Payments Submission (FPS), and until the 19th of the following month (January 2024) to send an Employer Payment Summary (EPS) to HMRC. However, if the pay day is sooner than the payment date these can be submitted early.
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 Chantelle Martinez’s blog here.
Our payroll team are always happy to help with any queries on running your Christmas payroll so please get in touch at payroll@ct.me
Author: Eilidh Ironside, CT: Payroll
