HMRC to change salary advance reporting requirements

HMRC has confirmed plans to change the requirements for reporting salary advances.

Salary advances are arrangements between employers and employees that allow workers to access some of their earned salary before their contractual payday.

Current legislation means that these advances are treated as a payment on account of earnings. As a result, employers must submit additional real-time information (RTI) reports to record them, which can create an extra administrative burden for businesses.

The additional returns can also impact HMRC processes by increasing the risk of PAYE coding or universal credit errors.

The secondary legislation will address this issue by allowing employers to report salary advances on or before the employee's usual payday. This will mean each salary payment only needs to be included on an RTI report once, thereby simplifying the process for both employers and HMRC.

HMRC will provide further information and guidance about the proposed rules in a future employer bulletin.

Speaking in the latest agent update, HMRC said:

"Employers who are currently reporting salary advances on or before the contractual pay date may continue to do so until legislation is in place."

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