In short
If you pay staff early at Christmas, report their normal payday on the Full Payment Submission (FPS), not the date the money actually goes out. HMRC says this helps protect employees' Universal Credit and other income-based benefits. The November PAYE payment deadline falls on Sunday 22 November 2026, so cleared funds need to reach HMRC by Friday 20 November. Christmas parties up to £150 a head and gifts of £50 or less can be tax-free if the conditions are met.
Christmas moves paydays, squeezes processing time and brings a few tax questions about parties and gifts. HMRC's October 2026 Employer Bulletin, published on 21 October, covers how to report early Christmas pay. Here's what to plan for now.
Paying early? Report the normal payday
If you pay staff before Christmas instead of on their usual date, the FPS should still show the normal or contractual payment date. HMRC's example: if you pay on 19 December but payday is normally 31 December, report 31 December as the payment date and send the FPS on or before 31 December.
This matters for staff who claim Universal Credit. If the FPS shows the early date, the pay can be counted in the wrong Universal Credit assessment period and affect their award. HMRC says reporting the normal date helps protect employees' eligibility for income-based benefits.
GOV.UK's guidance on reporting to HMRC says the same for any early payment: enter your usual payday even if you pay earlier, for example when payday falls on a bank holiday. You can also send the FPS before your regular payday if payroll staff are going on holiday.
Christmas and New Year bank holidays
According to GOV.UK, the bank holidays are:
- Friday 25 December 2026: Christmas Day
- Monday 28 December 2026: Boxing Day (substitute day)
- Friday 1 January 2027: New Year's Day
- Monday 4 January 2027: 2 January substitute day (Scotland only)
Banks don't process payments on these days. If you pay staff at the end of the month, agree your December cut-off for timesheets, overtime and changes early, and tell staff if payday is moving.
The November PAYE payment falls on a weekend
The electronic deadline for PAYE and National Insurance in November is Sunday 22 November 2026. HMRC says cleared funds must reach its account by Friday 20 November, unless you can arrange a Faster Payment. Check your bank's daily limits and cut-off times. Late payment can lead to a penalty. Other key dates are in our payroll deadlines guide.
Christmas parties: the £150 rule
An annual party is exempt from tax and National Insurance if it is open to all your employees (or all staff at one location), is held every year, and costs £150 or less per person, according to GOV.UK's guidance on social functions. Online parties count too.
Work out the cost per head by dividing the total cost, including VAT, transport and any overnight stay, by everyone who attends, guests included. The £150 is a limit, not an allowance. If a party costs £151 a head, the full amount is taxable, not just the extra £1, according to HMRC's Employment Income Manual. A non-exempt party goes on P11Ds with Class 1A National Insurance, or many employers cover it with a PAYE Settlement Agreement.
Gifts and bonuses
A turkey, hamper or bottle of wine can be a tax-free trivial benefit if it costs £50 or less, isn't cash or a cash voucher, isn't a reward for work or performance, and isn't in the employee's contract, according to GOV.UK. Directors of close companies are capped at £300 of trivial benefits a tax year.
A Christmas bonus paid in cash is different. It is earnings and goes through payroll with tax and National Insurance, and counts towards pension contributions if it is pensionable under your scheme.
Christmas payroll checklist
- Confirm December paydays and tell staff about any early payment.
- Set cut-off dates for hours, overtime and starters or leavers.
- Keep the normal payday on the FPS for any early payment.
- Pay November's PAYE so it clears by Friday 20 November.
- Budget the party at £150 a head or less, including VAT and transport.
- Keep gifts at £50 or less and non-cash, and put bonuses through payroll.
Want December off your plate? Buffalo Payroll plans holiday cut-offs, early pay runs and RTI submissions as part of our managed payroll service, from £5.50 + VAT per payslip.
This article is general information based on official sources at the date of publishing, not legal or tax advice. Rules can change, so check the linked guidance or talk to us about your payroll.