Summer may only just be ended (with some of us still hanging onto our flip flops and shorts in denial), but Christmas is nearly here, and you know what that means – it’s time to sort out those festive pay dates!
But before you rush to pay your team early (and we know you want to be a good employer), there’s something crucial you need to know about RTI reporting that could literally make or break your employees’ Christmas.
The big RTI rule that many get wrong
The golden rule is that if you’re paying early in December because of bank holidays, you must still use your normal pay date on your RTI submission, not the date you actually pay.
So if you normally pay on December 31st, but you decide to be lovely and pay everyone on December 20th, so they have money for Christmas shopping. Your RTI submission should still show December 31st as the pay date – and you need to submit that FPS by December 31st too.
This isn’t just bureaucratic nonsense. It’s actually protecting your employees in a big way.
The problem this causes for Universal Credit
If any of your employees are on Universal Credit, getting this wrong could have a devastating effect. This is because UC payments are calculated monthly based on when they first applied for benefits. If you report the wrong date on your
RTI, you could accidentally mess up their benefit payments.
Here’s an example;
Sarah normally gets paid on the last day of each month, and her Universal Credit is calculated accordingly. If you report her December pay as being paid on the 20th instead of the 31st, the system might think she’s getting two lots of pay in one UC period. This would result in her January Universal Credit being reduced or even stopped completely.
That’s not the Christmas gift anyone wants to give their employees.
HMRC gets it
The good news is HMRC understands that businesses want to pay early at Christmas. They brought in a permanent rule in 2019 that lets you do exactly this – pay early, but report your normal date. It’s their way of saying “be nice to your employees, but keep the paperwork consistent.”
So don’t worry about there being a mismatch between the actual pay date and RTO submission date in December, HMRC expect this.
The bank holiday dates for 2025
This year, Christmas Day (25th) and Boxing Day (26th) fall on a Thursday and Friday, with New Year’s Day (1 Jan) also on a Thursday. Because these fall on weekdays, there are no substitute days needed. Scotland gets an extra day off on
January 2nd, but that doesn’t affect your RTI reporting.
Quick reminder about holiday pay and bank holidays
Under the Working Time Regulations, employers do not have to provide paid leave for bank holidays (unless it is part of the employee contract), and they can be counted towards their normal 5.6 weeks of annual leave.
For those with workers with irregular hours:
- Accrual-based workers – holiday entitlement is based on hours worked, so if they choose to take Christmas as paid leave, it uses accrued hours.
- Rolled-up holiday pay – They get holiday pay in each pay period, so no additional payment is due for bank holiday leave. Some employers provide enhanced contractual entitlements, such as extra pay for holidays, such as Christmas and New Year, so check your contracts and make sure your employees understand their entitlements.
Your Christmas payroll checklist
- Pay early, report normal – Pay your team whenever you like, but use your contractual pay date for RTI
- Submit on time – Your FPS must be submitted by your normal pay date, not your early payment date
- Tell your team – Let employees know they’re getting paid early as a one-off treat
- Check contracts – Make sure you know what holiday pay you actually owe
- Plan for January – Same rules apply if New Year’s Day affects your January pay run
Don’t let RTI ruin Christmas
The last thing you want is employees calling you in January asking why their Universal Credit has been messed up. Getting your RTI dates right isn’t just about compliance – it’s about making sure your Christmas kindness doesn’t backfire.
At Ascend Payroll, we see this every year. Employers with the best intentions accidentally cause benefit problems for their staff by reporting the wrong dates. It’s easily avoided when you know the rules.
Christmas payroll doesn’t have to be stressful. If you’re not sure about your RTI reporting or want someone to handle the whole festive payroll headache, that’s what we’re here for.
After all, you should be planning your Christmas party, not worrying about whether you’ve accidentally messed up someone’s Universal Credit!
