Many businesses pay their December payroll early. However, for employees who also claim Universal Credit, this can cause a problem.
If you pay your employees on the same date each month e.g. 28th, this date will sometimes fall on a weekend. In November 2021 the 28th was a Sunday. This means you still report the payment date as 28th in your RTI submission to HMRC even if you actually pay your employee on 26th November to catch the last banking day of the week.
In its latest employer bulletin, HMRC issued a reminder to employers that pay their December payroll earlier than usual. Employees who are in receipt of Universal Credit can be adversely affected if the correct reporting procedure is not followed, as the system for reporting income may include two payments for a single assessment period. Universal Credit entitlement is assessed on an ongoing basis, this can reduce or even remove their entitlement altogether, causing hardship. Also, the reporting of zero earnings in the next assessment period can mean that entitlement to the work allowance is lost in that period.
HMRC says that in order to avoid the issue, the employer should always use the regular contractual pay date in the full payment submission (FPS) – even if the pay date is earlier or later than usual. So, for December a business that usually pays employees on the last working day of the month should use 31 December on the FPS. Doing this will ensure the problem of double counting is avoided.
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