16 December 2019 by Crystal HR & Payroll Ltd
Christmas is almost upon us and we’re starting to think of Secret Santa maybe, the office Christmas party, presents for the kids, friends, family and loved ones as well as a well-earned break, so getting your payroll right takes a little more planning.
If you’re responsible for the payroll this Christmas and New Year, there are a few things you need to do before you can put your feet up and enjoy the festivities.
1. Early salary and wages payments.
At this time of year with banks being closed on normal working days and staff taking holiday over Christmas or the company even closing for the holidays you might have to bring the payroll date forward by a couple of days or more.
This year as Christmas Day and Boxing Day are on Wednesday and Thursday and New Years Day is also on Wednesday, you may need to pay employees early if your monthly payroll falls on one of these dates or if you are closed over Christmas and operate a weekly payroll, make advance payments to your employees in order that everyone is paid on time.
Most software will have an advance pay feature, though if you use HMRC Basic PAYE Tools, this feature is not available so you will need to run any future dated payrolls early.
2. Staff working over the Christmas period.
You may have staff who will be working over Christmas and you will need to make arrangements for these members of staff to be paid.
You should inform your payroll department/person who these employees are and when they should be paid. You should also communicate this to the employees themselves.
Current legislation doesn’t cover paying staff over the festive period so you should refer to your company’s employment contracts.
3. Christmas bonuses and gifts to employees.
You may have decided to give your staff a bonus or gift this Christmas and it is important for you to make a clear distinction between a cash bonus or physical Christmas gift.
There are a number of considerations to take into account such as:
Are you giving a cash bonus or physical gift to your employees?
- If you provide a gift to your employee, can it be resold for cash?
- If you pay a cash bonus of any description, this will be treated as earnings and will need to be added to the value of your employee’s other earnings. You will need to deduct tax and class 1 National Insurance through your payroll.
- If you give gifts or physical goods and they can’t be counted as trivial benefits, you will need to report the gift on a P11D form and pay class 1A National insurance on the value of the benefit.
So what is a trivial benefit?
You don’t have to pay tax on a benefit for your employee if all of the following apply:
- it cost you £50 or less to provide
- it isn’t cash or a cash voucher
- it isn’t a reward for their work or performance
- it isn’t in the terms of their contract
This is known as a ‘trivial benefit’. You don’t need to pay tax or National Insurance or let HM Revenue and Customs (HMRC) know.
You can find more information on the HMRC website
Another important point for getting your payroll right at Christmas is…..
4. Full Payment Submission (FPS) and Employer Payroll Summary (EPS) changes
And finally, if you bring forward your company payroll date, (the day you actually pay staff), you should still enter your usual date that you pay employees.
As an example, you might pay employees on 25th of each month, but due to Christmas Holidays, you pay employees on 15th of December but you should still use your regular pay date of 25th, though you can file your return early, but you shouldn’t file it too early in case something changes as you might need to file an adjustment.
More information can be found on the HMRC Employer Bulletin for October 2019 or on the HMRC website
We hope this has been of some help to you and you can go on annual leave knowing you have everything covered.
If you need some help with getting your payroll right at Christmas or any other time of year for that matter, get in touch now and we will be pleased to discuss how we can help you and our fantastic packages we can offer you……