From 6 April 2024, a payment on account of salary (referred to as an advance) should be reported by employers via PAYE RTI as part of the amount paid on the normal payday, rather than reported as being made on the date advanced.
This relaxation was announced by HMRC in the February 2023 issue of the Employer Bulletin. It is made by the Income Tax (Pay As You Earn) (Amendment) Regulations 2024) SI 2024/305 for income tax purposes, and by the Social Security (Contributions) (Amendment No.3) Regulations 2024 SI 2024/306 for the purposes of national insurance contributions.
Practical points
This relaxation applies even if the normal payday is in a tax year later than that in which the advance was made. It also applies where the advance is made by a third-party scheme provider acting on the employer’s behalf.
Only an advance of salary paid within the pay period and deducted from the salary actually paid is covered by this relaxation. As explained by HMRC, advances by way of loan “including long-term advances, often made for specific purposes such as the purchase of a bicycle, season tickets or moving expenses … are not considered payments on account of earnings, so fall outside the scope of this [change]”.
Therefore, employers will need to ensure that any advance is not so large that some of it falls into the category of a loan, in which case a RTI full payments submission will be required to be submitted on or before the date of payment.
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