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Forum Home  →  Discussion  →  Universal credit administration  →  Thread

Advice for clients who are paid early at Christmas and therefore receive 2 payments in an asssement period

Tina M
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Benefits team - Stoke-on-Trent Citizens Advice Bureau

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HMRC has sent out this memo to JCP staff

Guidance for employers on reporting PAYE information in real time when payments are made early at Christmas

In December 2018, we wrote to employers to advise a temporary easement on reporting PAYE information in real time, as we know some employers pay their employees earlier than usual over the Christmas period. This can be for a number of reasons, for example during the Christmas period the business may close, meaning workers need to be paid earlier than normal.
Following feedback from employers and the Department for Work and Pensions (DWP) we have received approval to make this easement permanent. HMRC’s employer guidance will be updated shortly.
If you do pay early over the Christmas period, please report your normal (or contractual) payday as the payment date on your Full Payment Submission (FPS) and ensure that the FPS is submitted on or before this date.
For example: if you pay on Friday 20 December 2019 but the normal/contractual payment date is Tuesday 31 December 2019, please report the payment date on the FPS as 31 December and ensure the submission is sent on or before 31 December.
Doing this will help to protect your employees’ eligibility for Universal Credit, as reporting the payday as the payment date may affect current and future entitlements.
The overriding PAYE reporting obligation for employers is unaffected by this announcement and remains that you must report payments on or before the date the employee is paid, i.e. payday

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Gareth Morgan
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Managing director - Ferret, Cardiff

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Why is this an easement?  Employers should use the contractual date anyway.

Charles
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Accountant, Haffner Hoff Ltd, Manchester

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There are two issues here:
1. the deadline for the employer to report to HMRC, and
2. specifying the payment date.

The legislation (Income Tax (PAYE) Regulations 2003 r.67B and Sched. A1) only discusses the actual date of payment, and requires employers to:
1. report on or before that date, and
2. report the date the payment is made.

HMRC are therefore:
1. providing an easement on the date the report is required to have been made, and
2. telling employers to disregard (!) the law regarding the date of payment.

Gareth Morgan
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I’m sure you’tr right Charles but the point I’m trying to make is that this isn’t new.  The standard guidance to employers already covers this, and has done for some time.  Heres a July 2018 HMRC document.

“2018 to 2019: Employer further guide to PAYE and National Insurance contributions
Updated 17 July 2018

There are legal requirements that mean employers must comply with their obligations. At the time of writing, this guidance sets out HMRC’s view on how these legal requirements can be met.

1.8 Operation of PAYE and Class 1 National Insurance contributions when the regular date for payment is a non-banking day
When a regular payday falls on a non-banking day (Saturday, Sunday or bank holiday) and because of this payment is made on the:
• last working day before the regular payday
• next working day after the regular payday

For PAYE purposes the payment may be treated as having been made on the regular payday. This is also the date that should be reported on the FPS as the ‘payment date’ even if the actual payment is made slightly earlier or later. There’s a weekly and monthly chart at paragraph 1.14.

For National Insurance contributions purposes the payment must be treated as if it had been made at its regular time, if the actual and regular payment days are in the same tax year. The payment may also be treated as having been made at its regular time when the payment dates cross a tax year.

When a regular payday falls on a non-banking day but payment made on the last working day before the regular payday
Pay due on Saturday 6 January 2018 (tax month 10) but paid on Friday 5 January 2018, should be treated for PAYE purposes as being paid on 6 January 2018.
For National Insurance contributions purposes the payment must be treated as having been paid on 6 January 2018. The ‘payment date’ on the FPS should be the 6 January 2018 and payments should be reported on or before 6 January 2018.

When a payment is made on the first working day after the regular payday
Pay due on Saturday 6 January 2018 (tax month 10) but paid on Monday 8 January 2018, should be treated for PAYE purposes as being paid on 6 January 2018.
For National Insurance contributions purposes the payment must be treated as having been paid on 6 January 2018. The ‘payment date’ on the FPS should be the 6 January 2018 and in these cases you should either:

• report the payment on the FPS sent in advance of the actual payment date (on or before the 6 January 2018)
• send the FPS on the actual payment date (8 January 2018) and complete the ‘late reporting reason code’ G on the FPS, this is because if the FPS is sent on the 8th, showing a payment date of the 6th, it’ll appear to be late and a penalty may be charged

Charles
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Accountant, Haffner Hoff Ltd, Manchester

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Yes, you’re right, it’s definitely not new. But it begs the question: why can’t they put all this on a statutory footing, rather than leaving it as an easement, and in one respect questionable whether it complies with the law???

Tara CAC
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Gareth Morgan - 08 November 2019 11:53 AM

I’m sure you’tr right Charles but the point I’m trying to make is that this isn’t new.  The standard guidance to employers already covers this, and has done for some time.  Heres a July 2018 HMRC document.

“2018 to 2019: Employer further guide to PAYE and National Insurance contributions
Updated 17 July 2018

There are legal requirements that mean employers must comply with their obligations. At the time of writing, this guidance sets out HMRC’s view on how these legal requirements can be met.

1.8 Operation of PAYE and Class 1 National Insurance contributions when the regular date for payment is a non-banking day
When a regular payday falls on a non-banking day (Saturday, Sunday or bank holiday) and because of this payment is made on the:
• last working day before the regular payday
• next working day after the regular payday

For PAYE purposes the payment may be treated as having been made on the regular payday. This is also the date that should be reported on the FPS as the ‘payment date’ even if the actual payment is made slightly earlier or later. There’s a weekly and monthly chart at paragraph 1.14.

For National Insurance contributions purposes the payment must be treated as if it had been made at its regular time, if the actual and regular payment days are in the same tax year. The payment may also be treated as having been made at its regular time when the payment dates cross a tax year.

When a regular payday falls on a non-banking day but payment made on the last working day before the regular payday
Pay due on Saturday 6 January 2018 (tax month 10) but paid on Friday 5 January 2018, should be treated for PAYE purposes as being paid on 6 January 2018.
For National Insurance contributions purposes the payment must be treated as having been paid on 6 January 2018. The ‘payment date’ on the FPS should be the 6 January 2018 and payments should be reported on or before 6 January 2018.

When a payment is made on the first working day after the regular payday
Pay due on Saturday 6 January 2018 (tax month 10) but paid on Monday 8 January 2018, should be treated for PAYE purposes as being paid on 6 January 2018.
For National Insurance contributions purposes the payment must be treated as having been paid on 6 January 2018. The ‘payment date’ on the FPS should be the 6 January 2018 and in these cases you should either:

• report the payment on the FPS sent in advance of the actual payment date (on or before the 6 January 2018)
• send the FPS on the actual payment date (8 January 2018) and complete the ‘late reporting reason code’ G on the FPS, this is because if the FPS is sent on the 8th, showing a payment date of the 6th, it’ll appear to be late and a penalty may be charged

The difference is paying early due to payday falling on a non-working day and choosing to pay early (eg at Christmas paying on 20th Dec but payday is usually 31st Dec)

Gareth Morgan
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Managing director - Ferret, Cardiff

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Tara CAC - 13 November 2019 12:23 PM

...choosing to pay early (eg at Christmas paying on 20th Dec but payday is usually 31st Dec)

From the HMRC note

“...For PAYE purposes the payment may be treated as having been made on the regular payday. This is also the date that should be reported on the FPS as the ‘payment date’ even if the actual payment is made slightly earlier or later.”

Tara CAC
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Children's Centre Project: Citizens Advice Cornwall

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I was clarifying why ‘easements’ for Christmas payments was a new/required rule. Previously if they paid early for Christmas (not due to payday on a non-working day) they were supposed to enter the actual date paid for PAYE purposes. The section you quoted from the Employer Guidance for PAYE and NICs is specifically about payday on a non-working day.