Ian Holloway discusses the ‘on or before’ real time information (RTI) implications to be aware of when bringing paydays forward at Christmas.
When reporting information via the full payment submission (FPS), there is the ‘per pay-period’ obligation to submit this on or before the date of payment (SI 2003/2682, reg 67B).
The date of payment (or payday) is not reported in the FPS; however, the field payment date is reported. The payment date is the date the employee is contractually entitled to be paid.
Example 1: Payday vs payment date
A monthly payroll pays via BACS on the 30th. In 2024, 30 November was a Saturday, so the payday was brought forward to the banking day before (29 November).
Whilst the payday is 29 November and the FPS is returned to HMRC on this date, the FPS declares 30 November as the payment date.
Payment date?
The payday and the payment date are not always the same, and employers must always report the payment as having been made on the regular payday, even if it was not. The important reason for this is the interaction between RTI and the Department for Work and Pension’s Universal Credit, which relies on earnings paid in the calendar month assessment period.
Employers can control the earnings paid in the Universal Credit assessment period by the accurate reporting of the payment date in the FPS.
The festive season
It is common for employers to bring forward paydays because of Christmas, not least because of the following non-banking days:
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Christmas Day (Wednesday, 25 December 2024);
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Boxing Day (Thursday, 26 December 2024);
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Friday, 27 December 2024 (in Northern Ireland); and
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New Year’s Day (Wednesday, 1 January 2025).
See the 2024 BACS calendar and note that 2 January 2025 is a regional holiday in Scotland but not a Bank Holiday.
In December 2018, HMRC advised a temporary on or before easement when paydays are brought forward during the festive period. Subsequently, the Employer Bulletin (October 2019) stated that this had been made permanent; therefore, this is an annual consideration, and employers were reminded of this in October 2024’s Bulletin.
Simply, a brought forward payday because of the festive period changes the on or before reporting obligation, but does not change the requirement to report the accurate payment date in the FPS.
Example 2: The brought forward payday and the ‘on or before’ implication
The above payroll (paying on the 30th) brings forward December 2024’s payday to 20 December.
The employee must be paid on 20 December; the payment date must be reported as 30 December, but the FPS can be sent on or before payday or on or before the payment date
On or before – except at Christmas
You will not find reference to this on or before reporting exception in HMRC’s PAYE Manual, with guidance from PAYE5000. In fact, PAYE5055 implies that failing to send the FPS on or before payday will be considered a late submission, and a late filing penalty will be issued.
This is not the case where paydays are brought forward because of Christmas, and there is no requirement for the FPS to contain a late reporting reason (A, B, C, etc). This is an annual HMRC concession.
At all other times of the year, the overriding PAYE reporting obligation for employers is unaffected by this concession, and employers must send the FPS on or before the date the employee is paid.
This is a great concession to have up one’s sleeves, although why delay the submission of the FPS? Much better to send the FPS when employees are paid so the festive season can be enjoyed without having to worry about a pending submission to HMRC.
Practical tip
Note the above considerations when paydays are brought forward at Christmas. However, the RTI payment date reporting obligation applies every time a payment is made. For the correct working of Universal Credit, it is vital to recognise that payday is not the same as the payment date.
