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Employers warned over care with Christmas payroll as could make employees worse off

Employers who try and help employees buy paying Christmas salaries early could affect those on universal credit by up to 55%.

That is the stark warning from tax and advisory firm Blick Rothenberg. Robert Salter, a tax service director with the firm said: In the run-up to Christmas, it is common for employers to pay December salaries earlier than normal but if they get the dates wrong on the electronic submissions, they make to HMRC, it could severely impact those universal credit

Robert 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.”

He added: “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.”

Robert said: “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 UC, to top up their pay.”

He added: “In broad terms, reporting the wrong pay period – and thereby artificially inflating the perceived wages of an employee, could reduce their UC support from the Government by as much as 55%. Not exactly the type of Christmas Present that anybody would want this time of year.”

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Employers warned over care with Christmas payroll as could make employees worse off

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