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Watch out for this trap if you’re paid early for Christmas

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Written by: Emma Lunn
22/11/2021
Employers who pay employees their Christmas salaries early could make their workers worse off if they are claiming Universal Credit.

Many companies choose to process wages early in December. This is because of the high number of bank holidays in December and to ensure that staff are paid in time before Christmas.

But this means that some people who are claiming Universal Credit will be paid twice in one assessment period – meaning they could miss out on a month’s Universal Credit payment.

Accountancy firm Blick Rothenberg has warned that if payroll departments get the dates wrong on the electronic submissions, they make to HMRC, it could severely impact those workers claiming Universal Credit.

Robert Salter, Blick Rothenberg tax service director, said: “Employers may pay the salary for the month ended 31st December on say the 17th of December rather than the (traditional) last working day of the month, because of office closures and / or to assist employees from a cashflow perspective which is a nice gesture, but it could go wrong.

“Such seasonal payroll arrangements are well-established and perfectly legitimate, but it is important for payroll providers to get the electronic payroll submission – known as an FPS – to correctly record the period that the pay relates too.

“If, for example, using the above dates, the FPS said the earnings were purely for the period ended 17th December rather than the correct date of 31st December, this could impact the Universal Credit (UC) entitlement of those employees who are in receipt of this benefit.”

“It’s an easy mistake for employers – and their payroll teams – to make but it could have a really painful impact on those employees and their families who are in receipt of Universal Credit, to top up their pay.”

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