This is the season to be jolly and pay people earlier than usual!
No sooner than November payroll cycle has finished we are preparing for December payrolls which are generally paid earlier than usual. Although not generally as busy (or stressful!) as of year-end this time of year does pose some unique challenges including:
Changes to usual payment date – generally companies pay their employees earlier than usual in December, the most popular pay date is generally the last Friday before Christmas which will be Friday 20th December this year. This must be managed carefully as we generally end up with the majority of our clients wanting to pay on the same date rather than the usual staggered payment dates. To help us overcome this challenge we encourage our clients to send their payroll data as early as possible.
Correctly reporting submissions to HMRC – despite an earlier pay date than usual HMRC request that the usual pay date is reported. So, for example, if our clients request 20 December payment date but their normal payment date is 31 December 2019, HMRC asks the payment date is still reported as 31 December 2019. In this example, we would send the FPS on or before the 31 December.
Bonus payments – many employers choose to pay their employees a bonus in December which also generates additional work for all those involved. The most common query from employees is ‘why have I paid so much tax?!’ which can be quite challenging to explain as it does require an understanding of UK tax rules.
Christmas party expenses – although not purely payroll related, as a company we are able to provide advice on what can and can’t be claimed on a business expense. A summary of HMRC rules below:
- The party cannot cost more than £150 (including VAT) per person
- The party must be an annual event, such as a Christmas party or summer party
- The party must be open to all of your employees (and must consist mostly of employees)
- Shareholders are not included in the exemption if they aren’t employees or directors
- You can also claim an additional £150 per person for a plus one for each employee, providing they are a family member or partner.
Christmas working hours – particularly relevant to employees who are paid weekly, it is important to be aware of the impact bank holidays can have on pay dates and pay periods over the Christmas period, especially where some companies may close between Christmas and New Year. Again planning is essential, we always ensure there is sufficient cover in our office to ensure payment dates are honored and someone is here to answer client queries. Here you can also, learn about EPS ensuring employees pay is above the legal minimum pay rate.
From everyone here at EPS, we wish everyone a very Happy Christmas!