Christmas Payroll
For many employers, Christmas payroll requires more preparation than a normal monthly pay run. Businesses may close over Christmas, employees responsible for approving payroll may be on leave, and payments may need to reach employees earlier than usual.
Before submitting your December payroll instructions, it is important to confirm when employees should receive their pay, whether any additional payments are required and when the completed information must reach your payroll provider.
Paying Employees Early in December
Many employers choose to pay employees early because of Christmas. However, bringing forward the date employees receive their money does not mean that the payment date reported to HMRC should also change.
HMRC’s Christmas reporting guidance requires employers to report the normal or contractual payday on their Full Payment Submission (FPS), rather than the earlier date on which employees actually receive their pay. The FPS must be submitted on or before that normal payday.
For example, where employees would normally be paid on 31 December but receive their December salary on 18 December, the payment date reported to HMRC should remain 31 December. The FPS must be submitted on or before 31 December.
For Payroll Options clients, the date shown on payroll reports will remain the usual payday. Where we process Bacs payments for your employees, they will receive their money on the preferred payment date agreed with us.
Why the Reported Payment Date Matters
The date reported to HMRC can affect employees who receive Universal Credit or other income-based benefits.
Reporting an earlier December payment date could cause two monthly salary payments to fall within one Universal Credit assessment period. This may affect the employee’s benefit entitlement, even though their normal monthly salary has not changed. Keeping the normal payday on the FPS helps protect employees from problems caused by bringing their Christmas payment forward.
Employers should therefore distinguish between:
The actual payment date, when employees receive their money.
The normal or contractual payday, which remains the date reported to HMRC when applying the Christmas reporting guidance.
It is also sensible to explain the arrangement to employees in advance, particularly where the date on their payroll documents differs from the date the money reaches their account.
Christmas Bonuses
Cash Christmas bonuses are treated as earnings. They must be added to the employee’s other pay and processed through payroll, with PAYE Income Tax and Class 1 National Insurance applied as appropriate. Calling a payment a Christmas gift does not change its treatment where it is paid in cash.
When providing bonus instructions, employers should clearly confirm:
Which employees should receive a bonus.
The amount payable to each employee.
Whether the amount is a gross bonus before deductions or an intended net payment.
The distinction between gross and net is particularly important. If you intend an employee to receive a specified amount after deductions, tell us before processing so that the required gross payment can be calculated.
Bonus instructions should be included with your complete payroll information, rather than left until after the payroll has been prepared.
Christmas Gifts and Trivial Benefits
Non-cash Christmas gifts can have a different tax treatment from cash bonuses.
A gift may qualify for the trivial benefits exemption where all the following conditions are met:
It costs £50 or less to provide.
It is not cash or a cash voucher.
It is not a reward for the employee’s work or performance.
It is not something the employee is contractually entitled to receive.
Where all the conditions are met, there is no tax or National Insurance to pay and the benefit does not need to be reported to HMRC. A cash Christmas bonus cannot qualify for this exemption, even if it is £50 or less.
Employers should check the treatment before providing gifts or vouchers, rather than assuming that all Christmas gifts are tax-free.
December Payroll Cut-Off Dates
An earlier payday also means an earlier deadline for submitting payroll information.
Payroll Options is already including a December payroll deadline form with clients’ October and November payroll reports. The form concerns monthly payrolls and only needs to be completed once. Please return it by Monday 30 November 2026 to confirm your preferred December payment date. Clients with other payroll frequencies will be contacted separately by the beginning of December.
Returning the form confirms your intended payment date. However, due to the busy period, your payroll processing instructions must reach us one working day earlier than usual, regardless of your chosen payment date.
Please also take particular care when planning payments around the bank holidays on 25th and 28th December, as you need to submit your BACS payments earlier than usual.
Examples from this year’s schedule include:
| Preferred December payment date | Complete payroll instructions required by |
|---|---|
| Friday 18 December 2026 | 10:00am Friday 11 December 2026 |
| Wednesday 23 December 2026 | 10:00am Wednesday 16 December 2026 |
| Thursday 24 December 2026 | 10:00am Thursday 17 December 2026 |
| Tuesday 29 December 2026 | 10:00am Friday 18 December 2026 |
| Thursday 31 December 2026 | 10:00am Tuesday 22 December 2026 |
These are selected examples. Please refer to your December payroll deadline form for the full schedule and the deadline corresponding to your chosen payment date. Instructions received after the deadline will be subject to a late processing surcharge.
Preparing Your Payroll Information
Before submitting your December instructions, check that they include all relevant changes, such as:
Christmas bonuses and other additional payments.
Overtime, commission and variable hours.
New starters and leavers.
Salary changes and changes to deductions.
Absences or statutory payments affecting pay.
Make sure that someone will also be available to answer queries and approve the payroll before your business closes. If the usual approver will be on leave, arrange suitable cover in advance.
Employees should be told when they will receive their December pay and when their next payment is expected. An earlier December payday can mean a longer gap before the January payment, so clear communication is helpful.
Payroll Options Christmas Opening Hours
Our opening hours over the Christmas period are:
| Date | Opening hours |
|---|---|
|
Thursday 24 December 2026; |
9:00am to 1:00pm |
|
Friday 25 December 2026 |
Closed |
|
Monday 28 December 2026 |
Closed |
|
Tuesday 29 December 2026; |
9:00am to 3:30pm |
|
Wednesday 30 December 2026; |
9:00am to 3:30pm |
|
Thursday 31 December 2026; |
9:00am to 1:00pm |
|
Friday 1 January 2027; |
Closed |
| Monday 4 January 2027 | Normal hours resume |
Please take these reduced opening hours into account when planning payroll queries and approvals. Your payroll submission deadline remains the date shown on your December deadline form, rather than the last day our office is open.
Final Thoughts
Christmas payroll is easier to manage when payment dates, bonuses and submission deadlines are agreed in advance. Paying employees early should be planned separately from the date reported to HMRC, while cash bonuses must still be processed through payroll in the normal way.
If you are a Payroll Options client, please return your completed December payroll deadline form by Monday 30 November 2026 and submit your complete payroll instructions by the deadline for your chosen payment date. If you are unsure which date to select or how to provide your bonus instructions, please contact us before submitting your December payroll.
Useful resources:
October 2026 issue of the employer bulletin
Expenses and benefits: Christmas bonuses
Reporting PAYE information when payments are made early at Christmas