Salary advances: change to reporting rules
Where an employer makes part of a salary payment to an employee early, strict rules dictate when this must be included in the payroll real time information reporting. A recent change has relaxed the rules – what do you need to know?
Up until recently, the rules regarding reporting an advance on earnings required employers to submit an additional full payment submission (FPS) to record them on the day the advance was made. As this created an additional administrative burden, both for the employer and HMRC, as well as increasing the likelihood of Universal Credit errors, the requirement has been changed.
For pay periods falling after 6 April 2024, the advance can be reported on the FPS that covers the contractual payment date. This is the case even if the contractual payment date is in a later tax year. The change means the requirement for extra FPS submissions is removed.
It is important to note that this only applies to “payments on account of earnings”, rather than employer loans, e.g. for season tickets – even though these may be repaid via a deduction of salary each pay period.
Related Topics
-
Payroll changes for 2026/27
As the end of 2025/26 draws closer, HMRC has published a raft of updates and reminders for employers. Which changes do you need to be aware of that might impact your payroll in 2026/27?
-
Can you beat the bonus tax trap?
A fellow director has asked whether his bonus payment can be delayed until after 5 April 2026 to reduce his personal tax bill. Does his plan work and, if so, how does it impact the company’s tax position?
-
HMRC publishes penalty guidance for MTD IT
HMRC has published guidance on how penalties will apply under Making Tax Digital for Income Tax (MTD IT). With mandation approaching from April 2026, what do you need to know about the new regime?
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.