There has been much confusion about how to report payment dates for RTI where the employees are paid earlier or later than usual. This can happen around bank holidays such as at Easter and Christmas.
HMRC has made an absolute horlicks of explaining the correct procedure for employers to report the correct payment day.
In Employer Bulletin 77 it referred to “the normal payday”. It said the payment date to be reported on the FPS should be the normal payday if the employees are paid early or late because the normal payday falls on a non-banking day (see CWG2 para 1.8). This applies as long as the payment to the employee is made on the last working day before the normal payday or the first working day after the normal payday.
In December there can be up to four non-banking days in a row and employees can be paid much earlier due to the Christmas break. There is thus a special easement for December, which has now been made permanent as announced in Employer Bulletin 81.
For December only the contractual payday should always be the date reported on the FPS, even where the pay arrives in the bank account of the employee (or is physically handed over in cash) on a much earlier date.
For example, where the employees have a contractual payment date of the last day of the month, but this month they are paid on 23 December, the employer should still report the payment date as 31 December 2019. The FPS should be submitted to HMRC on or before 31 December 2019.
Written by the Tax Advice Network