Updated: Dec 7, 2022
We’re on the countdown to Christmas, looking forward to family, food and a festive break.
But for payroll professionals, Christmas and New Year provide a challenge that you need to prepare for before you can put your feet up.
Our top tips to reduce payroll issues at Christmas…
Changing the December pay date
Organisations regularly choose to bring the normal monthly pay date forward by a few days in December. For those running a weekly payroll, you may want to pay employees in advance to cover any days that the business is shut over the festive period.
Planning ahead is key to ensure your payroll team know what’s required and by when so that procedures and timelines can be amended. Nobody wants a pay issue leading into Christmas!
Christmas gifts or bonuses
If you are planning a Christmas bonus or to provide a gift to your staff, it’s important to be clear about the impact on their tax position.
If you give goods that cannot be exchanged for cash to an employee who earns less than £8,500 a year, these do not have to be reported to HMRC. Other Christmas bonuses will need to be declared.
Cash or cheque Christmas bonuses count as earnings so they will be need to be put through payroll as normal, with PAYE tax and Class 1 NI deductions.
If you give Goods as gifts to employees, you will need to report if they can be resold for cash and if they are given to employees who earn more than £8,500 a year.
Some gifts may be classed as trivial and therefore not attract Tax and NICs or require reporting.
Employers can check: https://www.gov.uk/expenses-and-benefits-christmas-bonuses for guidance.
For gifts given by suppliers or contacts, you can check: https://www.gov.uk/expenses-and-benefits-third-party-awards
Full Payment Submission and Employer Payroll Summary changes
If your company pay day is brought forward in December, it is important to ensure that the pay date on the FPS submission still shows the usual contractual pay date.
The EPS submission follows the standard timetable between the 20th of the current month and the 19th of the following month. Don’t get caught by HMRC penalties for late or inaccurate returns.
Working over Christmas
There are no specific legal requirements related to work and pay over the Christmas and New Year period. Any relevant or specific clauses should be found in the employee’s Contract of Employment.
On behalf of all payroll teams everywhere, please make sure you provide timely information to payroll and help to manage employee expectations about payment dates to ensure a seamless and smooth festive payroll.
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The content of our blogs is intended for general information only and does not replace legal or other professional advice.