Most employers paid their people early over the Christmas period. Outsourcing payroll ensures that, when you need to do it, the process is simple and compliant.
According to a recent poll by CIPP, 70% of employers paid their staff early over the Christmas season. This isn’t surprising. It’s a great way to help staff out at a costly time of year and it ensures that you don’t run into problems because the office is shut when you would normally be running payroll.
Why run your company payroll early?
Christmas is the obvious point of the year when businesses will typically choose to pay their people early, but there are others. Perhaps your business closes down for a few weeks in its low season. Maybe plant works or relocation mean you need a one-off closure for a few days over what would typically be your payday.
What does HMRC say about early payments?
Theoretically, these occasional early payments would be an issue for HMRC who use your real time Full Payment Submission (FPS) date as the normal or contractual payday. Payments should, in the normal course of events, be reported on or before the date employees are paid. Moving the FPS could affect your people’s entitlement to Universal Credit, something that would clearly be counterproductive.
To prevent that, HMRC has introduced a “permanent easement” for businesses that occasionally need to depart from their regular FPS (e.g. at Christmas). When you want to make an early payment, you can, but you should still report the payment date as your usual FPS date (and ensure payment is actually made by that date).
HMRC stresses that the facility to occasionally pay before formally reporting doesn’t override the regular position.
Why outsourcing payroll makes early payments easier
There is, however, one practical issue left outstanding. Early payments rarely happen during periods of business as usual. They’re mainly used to account for holiday periods such as Christmas or other periods of upheaval, which means placing extra demands on your payroll team at a time when they’re already facing a large workload.
We’ve written at length about the benefits of outsourcing payroll but another is that, with some advance planning, you can outsource the process of early payments too, which keeps your busiest periods free from additional payroll burdens.
And to find out more about tailoring our payroll service to meet your needs, talk to us.