Understanding the New Rules for Reporting Salary Advances

As of 6 April 2024, employers will benefit from a significant change in the reporting requirements for salary advances. Historically, reporting an advance on an employee's earnings necessitated an additional full payment submission (FPS) on the day the advance was made. This practice added to the administrative workload for employers and created potential issues with calculating Universal Credit. However, with the new update, this process is now simplified.

Key Changes Effective from 6 April 2024:

1. Simplified Reporting: Employers are no longer required to file an extra FPS on the day an advance is given. Instead, they can report the advance in the FPS that corresponds to the employee's regular contractual payment date.
2. Timing Flexibility: This adjustment applies even if the regular payment date falls into a different tax year. This flexibility reduces the complexity and administrative burden associated with managing payroll submissions.
3. Scope of Application: It’s crucial to understand that this change is specifically for “payments on account of earnings.” This does not include employer loans, such as those given for season tickets, which are typically repaid through salary deductions.

What Employers Need to Do:

• Review Payroll Processes: Update your payroll systems and processes to align with this new reporting requirement. Ensure your payroll team is aware that advances can now be reported on the regular FPS.
• Educate Employees: Inform your employees about how these changes might affect the timing of their reported earnings, especially if they are used to receiving salary advances.
• Monitor Universal Credit Implications: Be mindful of how this change may impact employees' Universal Credit calculations and provide them with guidance if needed.

This adjustment is designed to reduce administrative burdens and streamline the payroll process, making it easier for employers to manage salary advances. Keep this information in mind as you prepare for the new reporting rules next year.

If you need assistance with your company’s payroll or have any questions about these changes, Guru Accountancy Ltd is here to help. We offer expert payroll services tailored to meet your needs. Contact us today to ensure your payroll processes are efficient and compliant with the latest regulations.