RTI Reporting at Christmas: What Employers Need to Know

Paying employees early at Christmas can cause RTI reporting issues. Learn how to stay compliant with HMRC rules and avoid common payroll mistakes.

Christmas is a busy and generous time of year for many employers, with early payroll runs often arranged to ensure staff are paid before the festive break. However, paying wages early can lead to Real Time Information reporting errors if not handled correctly.

Each December, HMRC records a spike in late and incorrect RTI submissions, many of which are entirely avoidable. Understanding the rules and planning ahead is essential to remain compliant and avoid unnecessary penalties.

What is RTI and why does Christmas cause problems?

RTI requires employers to submit payroll information to HMRC on or before the date employees are paid. This is usually straightforward when payroll follows a regular schedule.

At Christmas, problems arise when payroll is processed earlier than usual, pay dates are brought forward but reported incorrectly, or RTI submissions are made using the normal pay date rather than the actual payment date.

HMRC is clear that RTI submissions must reflect the actual date employees are paid, not the contractual or usual pay date.

https://www.gov.uk/running-payroll/reporting-to-hmrc

 

Paying employees early: the correct RTI approach at Christmas

December is the only time of year when HMRC allows a specific exception to the usual RTI reporting rules.

If employees are paid earlier than normal at Christmas, the Full Payment Submission should still show the normal contractual payment date, not the date the money reaches employees’ bank accounts. The FPS must be submitted on or before the early payment is made, but the payment date entered must remain the scheduled pay date.

For example, if employees are normally paid on 31 December but you choose to pay them on 20 December due to the Christmas break, the FPS should show 31 December as the payment date and be submitted on or before 20 December.

This approach ensures that employees are not incorrectly reported as having been paid twice in one tax month and prevents issues with tax, National Insurance, Universal Credit, and HMRC records.

HMRC confirms this Christmas specific exception in its guidance on RTI reporting, and the Chartered Institute of Payroll Professionals also reinforces this position in its advice on RTI compliance when paying early at Christmas.

Outside of this Christmas concession, RTI submissions must always reflect the actual date employees are paid.

Do not try to correct it later

A common mistake is submitting an FPS early and then submitting another one on the normal pay date to correct the record. This can result in duplicate pay records, incorrect tax and National Insurance calculations, employees appearing to be paid twice, and HMRC compliance queries.

Once an FPS has been submitted with the correct early payment date, no further submission is required for that pay period.

What the CIPP advises

The Chartered Institute of Payroll Professionals regularly highlights the importance of RTI accuracy at Christmas. Their guidance stresses that employers should always report what actually happens, not what would normally happen.

Their article on RTI compliance when paying early at Christmas reinforces that early payment is not an exception to RTI rules and must be reported correctly to avoid errors and penalties. It is a valuable resource for employers and payroll professionals alike.

https://www.cipp.org.uk/resources/news/rti-compliance-when-paying-early-at-christmas.html

Planning ahead avoids issues

To ensure smooth payroll processing at Christmas, early payment dates should be agreed in advance, payroll cut off dates checked carefully, and sufficient time allowed for approvals and RTI submissions. Clear communication with your payroll provider is key.

Good planning reduces pressure, ensures compliance, and allows everyone to enjoy the festive period without payroll concerns.

Supporting clients at Christmas

At Augustus Payroll Services, Christmas payrolls are planned well in advance to ensure RTI submissions are accurate, timely, and fully compliant with HMRC requirements. Acting as an extension of our clients’ businesses, potential issues are anticipated before they arise, keeping payroll stress free during the busiest time of year.

For employers who want peace of mind at Christmas, professional payroll support can make all the difference.

Contact us to discuss your payroll requirements