HMRC issues last-minute RTI easement for December payments
On 17thDecember, employers and agents who are signed up to email alerts from HMRC will have received a somewhat surprising message as follows from the Director General of Customer Services:
Guidance for employers on Real Time Information reporting obligations for payments made early over the festive period
We know that some employers pay their employees earlier than usual during the festive period, this may be due to the business closing for Christmas and New Year.
If you do pay early, please report your normal payment date on your Full Payment Submission (FPS).
For example: if you pay on 21 December but your normal payment date is 31 December, please report the payment date as 31 December. In this example the FPS would need to be sent on or before the 31 December.
Doing this will protect your employees’ eligibility for Universal Credit, because an early payment could affect further entitlements.
This guidance applies only for the 2018 festive period.
It appears that this last-minute announcement, which may be too late for employers who have already paid employees for December, was prompted by a court case that has recently been heard in the High Court and in which judgement is awaited, which centres around the unfairness of a personalised and rigid universal credit award period. This can mean two salary payments in the December Award period, and none in January, leading to very real cash flow issues for Universal Credit claimants.
It’s important to pick out a few points from this announcement:
- It has always been the case (see CWG2 para 1.8) that where the contractual payment date falls at a weekend or bank holiday, and the employee is paid on the first banking day before or after the contractual payment date, the payment date that should be shown in the full payment submission (FPS) is the contractual payment date, notthe date that money was credited to the employee. This though was an easement designed to alleviate a problem for HMRC, and it’s a problem that will occur again next April. 6thApril 2019 is a Saturday. Payments that are made on Friday 5thmust still show Saturday 6thas the payment date to avoid the month 1 payment being made in the wrong tax year.
- Until today the non-banking day easement fell away if payment was brought forward earlier than the first banking day before the contractual payment date. So, if the payment due on 25th December was brought forward to Friday 21st the previous instruction was that the FPS had to be dated the 21st. That has now changed and the payment date would remain as 25th December, but only for December 2018?
- Why does the announcement say that this is only for the 2018 festive period, when this has been a problem for Universal Credit claimants since RTI and UC were introduced, and will continue to be every Christmas?
- Some payroll software may not be able to insert the contractual payment date in the FPS and have a different actual payment date when funds are credited
Only last Thursday (13th) the Employer Bulletin for December had this incorrect wording: ‘Submit your payroll on or before your employees’ pay day’. This was the same incomplete wording used in the August bulletin thatwas then clarified in the October bulletin in respect of the non-banking day easement!
Jon Thompson, Chief Executive of HMRC told the Public Accounts Committee in September that employers were the cause of problems with PAYE. No wonder employers are getting things wrong when the guidance on something as fundamental as the ‘date of payment’ changes on such a regular basis.