Changes to salary advance payments under Real-Time Information (RTI) should make filing for employers easier under new rules.
At a glance
From 6 April 2024, employers are no longer required to report each individual salary advance payment. Instead, they must submit one Real-Time Information (RTI) report when the remaining salary instalment is made.
'The Income Tax (Pay As You Earn) (Amendment) Regulations 2024' have simplified the process for employers.
A salary advance occurs when:
- Earnings are not paid at regular intervals.
- The payment would have otherwise been included in the next regular salary payment.
- The payment does not exceed an amount which reasonably represents completion of service and no other payment has been made for this service.
Any advance salary payments made that do not meet the above requirements are outside the scope of the new legislation.
New reporting requirements
From 6 April 2024:
- It's no longer necessary to submit a Full Payment Submission (FPS) and working sheet for each advance payment.
- The FPS and working sheet must be submitted by the date the reduced regular payment is paid.
- Advance payments are treated as being paid on the regular payment date.
- More than one advance payment will result in all payments being treated as paid on the final regular payment date.
Advances before the tax year-end
Where a salary advance payment is paid in one tax year and the subsequent reduced regular payment falls within the next tax year, HMRC will allow the salary advance payment to be treated as paid on the regular pay date.
- Regulation 7(3) of the Social Security (Contributions) Regulations 2024 prohibits any salary payments to be treated as not falling in the tax year they occurred.
- Regulation 7(3A) has been introduced to disapply Regulation 7(3) where the advance payment and final reduced regular payment fall in separate tax years.
This means only one FPS and working sheet will be submitted on the first regular payment date in the new tax year.
Useful guides on this topic
RTI: Real-Time Information for PAYE
What is RTI: Real-Time Information (RTI) reporting for PAYE? How does it work?
Penalties: RTI (Real-Time Information for PAYE)
What penalties apply to PAYE Real Time Information (RTI) reporting and payments?
External Links
The Income Tax (Pay As You Earn) (Amendment) Regulations 2024
