UNIVERSAL Credit claimants are being warned to make sure their bosses report early Christmas salary payments to HMRC properly or they could end up with their benefits slashed.
Many employers pay staff early in December, but experts warn mistakes in how the salary is reported could mean a drop in Universal Credit entitlement.
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Christmas is a common time for most workers to be paid early, as are other bank holidays during the year.
The department for work and pensions (DWP) links its Universal Credit earnings to payments that have been reported to HMRC.
Getting paid early may make it seem like you’ve been paid extra if the dates aren’t reported properly on your HR or account department’s full payment submission (FPS) to the taxman.
And if it looks like your pay has gone up – your benefits could go down.
The Government recently closed a loophole to make sure that people who get paid twice in one assessment period won’t lose out on Universal Credit.
It is believed this will help at least 85,000 Universal Credit payments who are paid monthly but previously lost out on payments as it was mistakenly reported that they were overpaid.
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But this depends on payroll departments reporting pay dates properly.
Many lucky employees could get paid for this month as early as December 17 if their company then closes for the festive period.
But tax experts warn that benefits could be slashed by up to 55% as a result if their payroll departments don’t put the usual date on their submissions to HMRC.
This is because the DWP may think you are getting paid both on December 17 and December 31, so it will wrongly think you are receiving more than usual and may qualify for less or no benefits.
Robert Salter, a tax service director with Blick Rothenberg, said: “In the run-up to Christmas, it is common for employers to pay December salaries earlier than normal.
“But if they get the dates wrong on the electronic submissions they make to HMRC, it could severely impact those on Universal Credit.
“In broad terms, reporting the wrong pay period – and thereby artificially inflating the perceived wages of an employee, could reduce their Universal Credit support from the government by as much as 55%.
“Not exactly the type of Christmas present that anybody would want this time of year.”
If you receive Universal Credit and you know your company is going to pay early, it’s worth flagging the issue to payroll now to avoid any confusion.
HMRC guidance to bosses states that anyone paying staff early needs to report the normal pay date, rather than the early one, on the FPS.
If you have had two sets of pay allocated to one assessment period, you should contact your work coach as soon as possible.
Otherwise, you may find your Universal Credit drops substantially.
You can contact the Universal Credit helpline by ringing 0800 328 5644 or through your work diary online.
Helplines are open Monday to Friday, 8am to 6pm and calls to 0800 numbers are usually free from a landline.
Martin Lewis urges anyone claiming Universal Credit to start a help to save account
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