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    Tag: Universal Credit

    Be prepared: payroll and bank holiday guidance for the festive season

    Posted on by Rebecca Campbell

    With the festive season on the horizon, it’s the perfect time to start planning for the impact of bank holidays and ensure payroll processes remain accurate and compliant. Early preparation helps avoid disruption, supports employees and ensures smooth operations over the holiday period.

    Bank holidays

    • Christmas Day – Thursday, 25 December 2025
    • Boxing Day – Friday, 26 December 2025
    • New Year’s Day – Thursday, 1 January 2026

    As all three holidays fall on weekdays, no substitute days are required this year, making scheduling more straightforward for businesses.

    Holiday pay – what employers and employees should know

    Under the Working Time Regulations, employers are not legally required to provide paid leave specifically for bank holidays. However, these days may be included within the statutory 5.6 weeks (up to 28 days) of annual leave.

    For irregular hours workers, holiday pay depends on the system used:

    • Accrual-based: Holiday entitlement is based on hours worked. Taking time off over Christmas uses accrued leave.
    • Rolled-up holiday pay: Holiday pay is included in regular wages, so no additional payment is due for bank holidays.

    Some employers offer enhanced contractual terms, such as extra pay for working on Christmas Day or New Year’s Day. Employees should check their contracts and clarify arrangements with their employer well in advance.

    Early payroll? RTI reporting is crucial

    If your business plans to pay staff earlier in December due to festive closures, it’s essential to follow HMRC’s Real Time Information (RTI) guidance:

    • Always report the contractual payment date, not the early payment date, on your Full Payment Submission (FPS). Example: If you pay on 20 December but the usual payday is 31 December, report 31 December as the payment date.

    This is especially important for employees receiving Universal Credit, as benefit assessments are based on reported earnings. Incorrect reporting can lead to reduced or missed payments, causing financial hardship.

    Key actions for employers – get ahead now

    • Review payroll schedules and confirm payment dates.
    • Communicate holiday pay policies clearly, especially for irregular hours workers.
    • Ensure RTI submissions reflect the correct contractual payment dates.
    • Consult HMRC guidance to stay compliant and avoid penalties.

    Get in touch

    Planning ahead ensures a smooth and stress-free festive period for everyone involved. If you wish to discuss any of the above in further detail, please get in touch with Julie Mason, director of payroll at PM+M using the button below.

    HMRC delays Real-Time Information (RTI) hours reporting changes until 2026

    Posted on by Georgia Flatley

    In an email to software developers, it has been confirmed that HMRC’s planned changes to Real-Time information (RTI) hours reporting will be delayed until 2026 at the earliest. Originally set to be introduced from April 2025, the changes have now been pushed back to give employers and payroll professionals additional time to adapt to the new requirements.

    The email reads:

    Employees’ hours data – requirement delayed

    Due to delays owing to the General Election and the lead-in time required to upgrade software and processes to prepare for implementation, employers will now not be required to start providing more detailed employees’ hours data through PAYE Real Time Information returns from April 2025. This requirement will not apply until April 2026 at the earliest. Final decisions on whether to go ahead with the regulations and any timelines will remain subject to decisions by the new government.

     

    Understanding RTI and the planned changes

    RTI was introduced in 2013 as a means for employers to report payroll information to HMRC in real-time, every time their employees are paid. This system was designed to improve the accuracy of tax and benefits calculations and to ensure that information on earnings is up to date. However, one area that has seen persistent challenges is the reporting of employees’ working hours, which has a direct impact on the calculation of entitlements such as Universal Credit.

    HMRC’s planned changes to RTI aimed to standardise the way working hours are reported, ensuring greater consistency and accuracy in the data provided by employers. Under the new system, employers would have been required to report the actual number of hours worked by each employee rather than providing a broad estimate. This change was intended to help HMRC better assess income levels for benefits purposes, ensuring that individuals receive the correct entitlements based on their actual working hours.

     

    Implications for employers

    For employers, the delay offers a temporary reprieve from the additional reporting requirements, but it also extends the period of uncertainty. While the extra time may be welcomed by those who were concerned about the immediate impact of the changes, it also means that businesses must continue to operate under the existing system for another year. This could create challenges for employers who were already gearing up for the changes and now need to adjust their plans accordingly.

    The delay may also have implications for employees, particularly those on variable hours contracts who rely on accurate reporting for their benefits. Without the changes to RTI, there is a risk that discrepancies in reported hours could continue to affect benefit calculations, potentially leading to under- or overpayments.

     

    Preparing for the future

    Despite the delay, it is important for employers to start preparing for the eventual implementation of the RTI changes. This includes reviewing existing payroll processes, ensuring that systems are capable of accurately tracking and reporting hours worked, and staying informed about any further updates from HMRC.

    While the delay in the RTI hours reporting changes provides short-term relief for businesses, employers must use this time wisely to prepare for the future, ensuring they are ready to comply with the new requirements when they come into effect in 2026.

    Get in touch

    If you have any questions about HMRC’s latest guidance and the delay to the implementation of RTI hours reporting, or would like to speak to our team of experts to discuss how you can prepare now for the changes due to come into force in 2026, get in touch by emailing enquiries@pmm.co.uk.