The reporting requirements for employers providing salary advances to employees will change from 6 April 2024.

Line of workers

HMRC have found that current regulations requiring multiple returns from employers are burdensome and can lead to PAYE coding or Universal Credit errors. From 6 April 2024, HMRC has simplified the process for employers under The Income Tax (Pay As You Earn) (Amendment) Regulations 2024. 

The amendment to reporting requirements will apply where: 

  • The employee’s salary is ordinarily paid at regular intervals of between one week and one month.
  • The employer pays part of the salary in advance (these arrangements are commonly known as salary advance schemes or earned wage access schemes). Such advances can be made through an employer or a third party. 

Current treatment

  • Salary advances made to an employee are treated as a payment on account of earnings. 
  • Employers are required to submit a Full Payment Submission (FPS) for each salary advance under Real-Time Reporting (RTI) on or before it is made and are required to record the payment in a deductions working sheet.
  • The remainder of the payment is then reported on the regular payment date.
  • This often results in multiple reports being made during a pay period.

 From 6 April 2024

  • There will be changes to: 
    • The reporting requirements.
    • The deadline by which employers must make entries in the deductions working sheets. 
  • Both the FPS and the deductions working sheet should treat the advance payments and the subsequent reduced regular relevant payment as a single payment.
  • For reporting purposes, the payments are treated as being made on the date that the reduced regular relevant payment is made.
  • Employers will be required to report the payment by the date on which the reduced regular relevant payment is paid. 
  • This means each payment of salary only needs to be included on an RTI report once.

Why has HMRC made changes? 

  • The amendments delay the reporting of salary advances until the reduced regular relevant payment has been made. There will only be one submission to cover both payments.
  • It is thought that the change will reduce PAYE coding or Universal Credit errors. 

Further guidance will be published by HMRC before 6 April 2024.

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?

Payroll reporting for salary advances consultation
HMRC have published a new consultation 'Draft regulations: proposed amendments in respect of salary advances'. It is seeking views on the changes to secondary legislation to allow employers to delay the reporting of such advances to employees.

 External Links 

The Income Tax (Pay As You Earn) (Amendment) Regulations 2024

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