Earned wage access and salary advances for employees
Earned wage access lets employees draw part of the pay they have already earned before payday, usually for a fee on each withdrawal. The FCA says most of these schemes are not regulated credit, so the provider has no duty to check affordability, the high-cost short-term credit price cap does not apply, and the Financial Ombudsman Service may not be able to consider complaints. A loan from the employer is treated differently: it is free of tax as a benefit while the employee's combined loans stay below £10,000 throughout the tax year.
Figures checked 30 October 2026.
Risks the FCA lists
- Consumer credit rules, including the duty to check affordability, sit outside most schemes
- A fixed fee on each withdrawal can work out at more than the payday loan price cap, especially with repeat use
- Taking pay early makes it more likely the employee runs short before the next payday, which can lead to repeat advances and rising fees
- Credit reference agencies do not record it, so other lenders cannot see it
- The Financial Ombudsman Service may not be able to consider a complaint
What the FCA suggests employers do
- Explain that an advance does not deal with wider money problems, and suggest debt or wider financial advice
- Point employees to free help such as Citizens Advice and StepChange
- Watch for staff who draw down often, and bring other support to their attention
- Consider regular notices to employees showing the charges they have built up
- Check whether the scheme involves regulated activities, and take professional advice if it might
The industry code
The Chartered Institute of Payroll Professionals and seven providers set up the Earned Wage Access Code of Practice in September 2023, following an FCA recommendation. Its nine commitments cover fair value, clear communication, customers in vulnerable circumstances, ongoing support, product governance, measuring outcomes, conflicts of interest, staff training and an annual assurance check. Ask any provider whether it has signed up.
Loans from the employer and tax
An employer can lend an employee money interest-free without a taxable benefit while the combined amount outstanding stays below £10,000 throughout the whole tax year. Above that, the difference between the interest charged and HMRC's official rate is a taxable benefit. A loan made through salary sacrifice has to be reported whatever its size.
Coaching alongside an advance
An advance changes when pay arrives, and the amount stays the same. On a Buzz guidance scheme every employee can connect their bank to the read-only Healthcheck and book a free 30-minute call with a coach, who works through the budget with them. The scheme costs £1 per employee a month with a £99 minimum. Anyone in financial difficulty is pointed to free debt advice first. Free debt help
Common questions
Is earned wage access a loan?
The FCA says most schemes are not credit, because the employee is drawing pay already earned. The FCA still lists risks similar to short-term credit, including fees and repeat use.
Who pays the fee?
The provider's contract with the employer sets who pays it. Ask the provider for the fee on each withdrawal in pounds, and who pays it.
Is an interest-free loan to an employee taxable?
Not while the employee's combined loans stay below £10,000 throughout the tax year. Above that, the benefit is taxable and is reported to HMRC.
Can we offer earned wage access and coaching together?
Yes. The FCA suggests employers that offer advances also point staff to debt and wider financial help.
Related guides
Guides for employers
- Financial wellbeing cost per employee in the UK
- Employee financial wellbeing for small businesses
- Financial coaching for employees
- Is employer-paid financial coaching a taxable benefit?
- The £500 pensions advice exemption for employers
- What the 2029 salary sacrifice cap costs employers
- Employee financial wellbeing survey questions
- Automatic enrolment duties for small employers
- Supporting employees through life changes
- How to set up a financial wellbeing programme
- Financial wellbeing policy template
- Financial wellbeing providers' prices compared
- Salary sacrifice calculator
- Benefit or pay rise calculator