For many businesses, December brings festive pressure and changes to normal payroll routines. Offices may close for several days and staff may also take annual leave. As a result, many employers choose to pay their staff earlier than usual in December. Early payment at Christmas requires careful handling of PAYE and Real-Time Information (RTI) reporting.
Incorrect dates can create avoidable problems for both employers and employees. HMRC has confirmed a permanent easement for RTI reporting at Christmas. This easement helps employers remain compliant. It also protects employees who rely on income-based benefits such as Universal Credit.
Why Employers Pay Staff Early at Christmas
Employers often pay wages early in December for varying reasons. Many businesses close fully or partially over the festive period. Payroll teams may not be available to process wages on the usual date. Paying early allows operations to pause without affecting staff pay.
Although employees receive their money earlier, PAYE rules do not change. Early payments does not alter the pay period. It also does not remove reporting responsibilities. Employers must continue to follow the correct PAYE and RTI reporting process, even at Christmas.
You must always report the normal or contractual pay date. You should never report the earlier date that employees receive their wages.
PAYE and RTI Reporting Rules for Christmas Payrolls
When you pay staff early at Christmas, HMRC expects you to follow specific RTI steps. These steps apply every year and form part of the permanent easement.
You should:
- Report the normal or contractual pay date on the Full Payment Submission (FPS)
- Submit the Full Payment Submission on or before that normal pay date
- Ensure all PAYE figures remain accurate and complete
This easement applies only when you pay early at Christmas. Outside of this period, standard PAYE rules apply. You must always submit PAYE information on or before the date you pay employees.
A Simple PAYE Reporting Example
Imagine you usually pay staff on 31st December 2025. This year, your business closes before Christmas. You decide to pay wages on 19th December 2025 instead. In this situation, you should:
- Report the payment date on the Full Payment Submission as 31st December 2025
- Submit the Full Payment Submission to HMRC on or before 31st December 2025
Even though staff receive their pay earlier, HMRC treats the payment as made on the usual payday. This keeps payroll records consistent and accurate.
Why You Need to Correctly Report PAYE at Christmas
Correct PAYE reporting protects employees who receive income-based benefits. Universal Credit assessments rely on reported pay dates rather than the date wages reach a bank account.
If you report the early payment date instead, the system may record two payments in one assessment period. The following assessment period may then show no income. This error can reduce or suspend Universal Credit for one month.
In some cases, incorrect reporting can reduce support by up to 55 percent. This outcome causes unnecessary stress for employees during an already expensive time of year.
Paying Staff Early and National Insurance Contributions
Using the contractual pay date also ensures correct National Insurance treatment. HMRC calculates National Insurance Contributions based on the reported pay date. Reporting the usual date prevents errors in contribution records. It also avoids problems with employee histories and future entitlement checks.
Temporary Christmas Staff and Pension Auto-Enrolment
Many businesses hire temporary or seasonal workers to manage festive demand. Short contracts and irregular hours remain common during this period. However, employers must still meet workplace pension duties.
You must consider auto-enrolment if a temporary worker:
- Is aged between 22 and State Pension age
- Earns at least £10,000 per year, which is equivalent to £192 per week or £833 per month for 2025
You should assess these workers each time you pay them. Short-term employment does not remove this responsibility.
Contact Us
Do you have any questions about how the Budget 2025 may impact you? Our team is here to help. We are not just accountants; we are Chartered Accountants with one of the most reputable and premium accounting bodies. We are registered and regulated by ACCA; so you can rest assured that you are in good hands. Knowing this, don’t hesitate to get in touch with us if you require assistance: Pi Accountancy | Contact Us
This article is for general informational purposes only and does not constitute legal or financial advice. While we aim to keep our content up to date and accurate, UK tax laws and regulations are subject to change. Please speak to an accountant or tax professional for advice tailored to your individual circumstances. Pi Accountancy accepts no responsibility for any issues arising from reliance on the information provided.