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PAYE Procedures – Why are there 53 paydays this year and how do we handle the payments?
Monday, July 26th, 2010
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A year has 365 days or, in a leap year, 366 days. That means that there are 52 whole weeks, plus an extra one or two days.
In a tax year that has 365 days, the first day and the last day fall on the same day of the week. If, say, the first payday falls on Friday, 6 April, the last payday will fall on Friday, 5 April, in the following year. There will be, in that tax year,
- 53 weekly paydays,
- 27 fortnightly paydays, and
- 14 four-weekly paydays.
In a tax year that has 366 days, the first two days and the last two days fall on the same days of the week. If, say, the first payday falls on Friday, 6 April or Saturday, 7 April, the last payday will fall on Friday, 4 April or Saturday, 5 April, in the following year. For either of those paydays, there will be, in that tax year,
- 53 weekly paydays,
- 27 fortnightly paydays, and
- 14 four-weekly paydays.
For determining in which tax week a payday falls, an employee’s payday is the earlier of
- the date on which the payment is actually made, and
- the date on which the employee is contractually entitled to be paid.
Example: If the contractual payday is Friday but employees are routinely given their wages on Thursday, the payday is Thursday.
Being specific therefore, there is a 53rd payday for employees paid weekly, a 27th payday for employees paid fortnightly, and a 14th payday for employees paid four-weekly if,
- in the 2010/11 tax year, the first payday is Tuesday, 6 April 2010 and the last payday is Tuesday, 5 April 2011.
- in the 2011/12 tax year (which has 366 days), the first payday is Wednesday, 6 April or Thursday, 7 April 2011 and the last payday is Wednesday, 4 April or Thursday, 5 April 2012.
- in the 2012/13 tax year, the first payday is Friday, 6 April 2012 and the last payday is Friday, 5 April 2013.
- in the 2013/14 tax year, the first payday is Saturday, 6 April 2013 and the last payday is Saturday, 5 April 2014.
The situation where there is an extra payday in the year occurs
- every 5 or 6 years for weekly-paid employees
- every 11 or 12 years for fortnightly-paid employees, and
- every 22 or 23 years for four-weekly-paid employees.
In a tax year with an additional payday, each employee’s free pay, as governed by the employee’s tax code, is applied over the usual number of paydays in the year, i.e. 52, 26 or 13 paydays. For the additional payment, the extra paydays are known, respectively, as Week 53, Week 54 and Week 56.
An extra amount of free pay is provided for the additional Week 53, Week 54 or Week 56 and, to achieve this, the tax for the payday is calculated non-cumulatively, i.e. as if it were week 1, week 2 or week 4, respectively. The effect is that, in that tax year,
- weekly-paid employees receive one extra week of free pay,
- fortnightly-paid employees receive two extra weeks of free pay, and
- four-weekly-paid employees receive four extra weeks of free pay.
In the case of employees with K codes, one, two or four weeks of additional pay are applied.
When completing forms P14 for employees after the end of a tax year with an extra payday, the employer enters “53”, “54” or “56”, as appropriate, in the section “Payment in Week 53”. The final tax code shown on the P14 should be the tax code used for the extra payday, e.g. 647LW1. The “W1” will, under standard year-end rules, be removed before processing the first pay of the new tax year.
The payroll department should correctly identify a week 53, week 54 or week 56 in advance of the tax year in which it will occur. Most payroll systems recognise the situation automatically; some require an indicator to be set so that the extra payday is calculated correctly. If the situation is not recognised in advance and employees are paid their first wages for the new tax year on the last day of the previous tax year, the employer’s tax office should be contacted immediately for guidance.
The problem of an extra payday never arises with employees who are paid monthly. There can only ever be 12 monthly payments in a tax year.
Ken Holmes says:
February 16th, 2011
09:38
Not sure I understand completely the details on your website above of how you decide if there is a week 53 in any particular tax year, but if a payday is Friday, does that mean that there is a week 53 in the tax year 2010/11, please.
I would be grateful if you can confirm I am correct in assuming that there is a week 53 in the tax year 2010/11.
Thanks for your help.
Ian Congreave says:
February 16th, 2011
17:35
Ken, there is a week 53 for an employer if that employer has 53 paydays in a particular tax year. In a tax year that does not have a leap-day (29 February), this happens only when the payday falls on 6 April. In 2010/11, 6 April 2010 was a Tuesday. If the first payday of the tax year was that Tuesday, the last payday of the tax year will also be on a Tuesday, i.e. Tuesday, 5 April 2011. Therefore, there are 53 Tuesday paydays in 2010/11.
So, there are always 53 paydays in a tax year, but they fall on a different day each year.
In 2011/12, which includes the leap-day 29 February 2012, the situation applies to paydays on two days. If the first payday of the tax year is Wednesday, 6 April 2011, or Thursday, 7 April 2011, there is a 53rd payday on Wednesday, 4 April 2012, and Thursday, 5 Arpil 2012.
It helps to look at a calendar to understand the week 53, 54 or 56 situation.
Lisa says:
March 10th, 2011
14:26
In the tax year 2007/08 we managed to have 14 pay period of 4 weekly pay. The first pay period of the year was for the 4 wks ending approx 8/3/07 and wk 1 appeared on employees payslips as the pay period. The 14th pay period was for 4 wks ending 5/4/08 and showed wk 53 on the payslips. (the sage payroll operated calculated normal freepay) Therefore according to the P60/P14 not enough tax was deducted. The revenue have started to adjust some employees codes to collect this underpaid tax. However, reading your notes above, should they have been allowed the additional allowances?
Thank you
Ian Congreave says:
March 11th, 2011
09:28
Lisa: I’m having difficulties with the information you have provided. There is a week 56 (not 53) every 22 or 23 years with a four-weekly payroll, in a year when there are 14 paydays between 6 April in one year and 5 April (dates inclusive) in the tax year. In the 2007/08 tax year, that could only happen if the first payday of the year fell on Friday 6 April or Saturday 7 April (there were 366 days in that tax year). Now, 8/3/07 was a Thursday and clearly did not fall within the 2007/08 tax year. The 14th payday could certainly have fallen on 5/4/08, but that would have been a “week 56″, not a “week 53″.
A “week 56″ means that, in that particular situation, where there are 14 paydays in the year, employees have an extra 4 weeks of free pay, but only every 22 or 23 years. (Consistently, weekly-paid employees have a “week 53″ every 5 or 6 years so, roughtly speaking, all non-monthly employees get an extra week’s free pay every 5 or 6 years on average.)
So, if 2007/08 did, in fact, have 14 paydays within the tax year for your employees, they were entitled to the extra four weeks free pay. The P14 for all of those employees should have stated that they had a week 56. You need to argue that out with HMRC.
Lisa says:
March 11th, 2011
11:25
Hi Ian
Thank you very much for this information. The payslips should have shown week 56 and I need to talk to Sage about this. I will contact HMRC and try to explain this. Hopefully they will agree there was no underpayment of tax for employees in that tax year. I find it a bit strange they have only picked up on 1 employee out of 20, any ideas?
Ian Congreave says:
March 11th, 2011
17:52
Lisa: I can only think that this employee’s P14 did not state that there was a week 56. In the absence of that note, it would appear that the tax was too low for the earnings.
John Livermore says:
June 29th, 2011
16:55
We have a 4 weekly payroll (next year will be a week 56) so this year our week 52 which we submit P14′s and P35′s for ends on the 11th March with a week 4 generated for the 8th April.
If someone leaves in say, week 2 or 3 which is still March but our new tax year should they still get a P60 for the last tax year as they worked it all and a P45 up to week 4? I know the tax year ends 5th April but that essentially is our new tax period
Ian Congreave says:
June 30th, 2011
07:13
John: Just to clarify the week 56 situation. Are you talking about Friday 11 March 2011 as the final payday for 2010/11 and Friday 8 April as the first payday for 2011/12? If so, your final payday for 2011/12 will be Friday 9 March 2012, and the first payday of 2012/13 will be 6 April 2012. That means that you will have a week 56 for 2012/13 – first payday on 6 April 2012 and 14th payday on 5 April 2013.
Anyway, to your main question, the P60 rules are independent of paydays and pay periods, requiring you to issue a P60 only if the employee is still employed by you on the final day of the tax year and, as a result, there will be no further taxable pay for that tax year. So, if an employee leaves during March, in the pay period that will end on a payday in the following tax year, a P60 should not be issued. It is possible that the leaver will work for another employer during the last days or weeks of the tax year and receive further pay that is taxable in that tax year.
Lisa says:
July 7th, 2011
13:58
We had some correspondence with you in March regarding wk 56. I have advised HMRC that the P14′s for 2007/08 should have shown wk 56 (not wk53) and an extra 4 weeks free pay should be allowed. I have spoken to various members of staff at HMRC to try and resolve this but have been unsuccessful. Their final word is that everything we have done is correct in the circumstances but they are only allowed to apply 12 months of freepay in any one year so they are also correct! In view of this, they are unable and unwilling to cancel the underpayment notice for the one staff member whose P14 this was actually picked up on. Apparently, if this had been self assessment they would have been able to allow the additional free pay but as it’s PAYE they can not. Is it worth appealing do you think?
Thanks
Ian Congreave says:
July 11th, 2011
12:07
Lisa, I have not been able to identify the legislation that applies to “week 56″, if indeed there is any, and the only specific guidance is on page 14 of the current CWG2 booklet. As your other employees enjoyed the extra four weeks of tax free pay, it seems unreasonable that one particular employee should be singled out for different treatmnent because you made an error on one P14. Nothing would be lost by making an appeal. It would be worth stressing that it is very difficult for an employer to handle correctly a situation that only arises every 22 or 23 years!
geraldine says:
October 12th, 2011
11:01
We pay two weekly payrolls, one on a Thursday and one on a Friday.
I realise the Thursday payroll will be a week 53 in the 2011/12 tax year as thursday is 05/04/11. Is it ok to make the second weekly payroll, normally paid on a Friday a week 53, as due to the good friday bank holiday, we will be physcially making payment into their banks on Thursday 05/04/11.
Ian Congreave says:
October 14th, 2011
08:51
It is unusual for Good Friday to fall on 6 April but, as you say, that is a problem in 2012. This has happened before and, in the circumstances you describe, you are permitted to treat the 6 April 2012 payday as if it were a week 53 for the 2011/12 tax year. You will, of course, have to get your payroll system to treat it in that way and I suggest that you get the procedure clarified with your system provider.
Richard King says:
December 20th, 2011
21:09
Hi Ian
Like Lisa above I am trying to get to the bottom of a week 56 payment & taxation rules in the 2007/08 tax year
we are paid 4 weekly and received 14 payments in the year above
ie 1st on 08 April 07 & last on 06 April 08
HMRC are saying that although the payroll system correctly gave allowances for the 14 payments and the correct tax was paid according to the guidance at the time, the employee still owes tax based on their pay in the year with standard 52 week allowances
When asked to explain this they say that although allowances are given for the week 56 payment, the employee is not actually entitled to them ( in effect they are just to stop a large tax payment in a single period) HMRC says they are entitled to claim back the extra allowance in subsequent years, and are doing so by adjusting 2011/12 codes for the relevant employee. again as in Lisa’s case they are appling this to 1 employee out of a dozen or so cases.
Are you able to shed any light on the ruling above and how would you suggest we follow this up?
Many thanks
Richard
Richard King says:
December 20th, 2011
22:20
just realised dates quoted above were wrong
14th payment date was 04 april 2008 ( the company changed the pay date from Sunday to Friday )
Ian Holloway says:
December 21st, 2011
11:33
Hi,
I am coming into this fresh as Ian Congreave has decided to retire. He will be greatly missed as a font of all knowledge and a thoroughly nice gentleman.
I have been surprised by my findings when researching this topic. Richard has the main facts in his post, however, I can clarify this:
When a Week 53, 54, 56 situation occurs in a tax year, the correct thing is to allocate more tax free allowances on a Week 1 basis in the payroll. This is documented above and in HMRC guidance. Effectively, the employee gets more tax free allowances. Most software will also do this automatically.
However, when the employee is subject to ‘assessment’, the situation is different – see http://www.hmrc.gov.uk/manuals/eimanual/EIM42420.htm. I have taken the word ‘assessment’ to mean either HMRC assessing the employee’s tax affairs or the employee assessing themselves under Self Assessment (completing theur own tax returns). In the case of ‘assessment’, the employee is NOT entitled to the additional pay adjustment and allowances must be ‘made on a statutory basis’ – i.e. one year’s worth not one year + one week, two weeks etc. So, for these ‘assessment’ employees, they will have received too much pay adjustment, probably underpaid tax and HMRC are entitled to claim this back from them. One such way would be through an adjustment to the employee’s tax code.
I must admit that I was not aware of this – that there was a difference between a Week 53 for a PAYE employee and a Week 53 for an assessment employee. It does seem very strange, however, this is what HMRC have documented happens.
I am going to query this with HMRC. With a Leap Year and Good Friday on 06 April in 2012, the possibilities of a Week 53 are high next year, so let’s try and get some guidance as to why there is different treatment.
That’s all I have for the moment but I will feed back when I have a response from HMRC.
Kind regards,
Ian
Ian Holloway
The Learn Centre
Dana Collins says:
January 11th, 2012
15:59
Our employees are weekly paid. I process the wages on a Wedesday and it enters their bank accounts on a Friday – although the week ends on a Saturday and therefore the payslips have the Saturday dates on. We also pay one week in arrears.
Will I have a week 53 pay period in the tax year 2012 – 2013?
Thanks
Sarah Henderson says:
February 3rd, 2012
12:51
Hi, I am wondering if you have any further info on the week 53 and Good Friday Scenario??
We process a weekly payroll and the pay day is Friday 6th April, which will be moved to Thursday 5th due to bank holiday, next year it will be pay day on Friday 5th April. I have been advised that in 2007 there was an agreement made with the HMRC called a Good Friday agreement which would mean we didnt have to have a week 53, I cannot seem to find anything about this, The reason for not wanting to have a week 53 is we also have a 4 weekly payroll and they are all alligned having a week 53 would knock this out… any help is appreciated!
fernb says:
February 3rd, 2012
15:36
Hi Dana,
I hope the following assists you with your query..
6th April 2012 falls on Good Friday
Therefore if payday for weekly payroll usually Friday but brought forward to previous working day in theory it is week 53, and
The next payday would be week 2
HMRC guidance treat payment as if made on normal payday
However if weekly payroll normally paid on Thursday 5 April this is week 53.
Regards
Fern
fernb says:
February 3rd, 2012
15:37
Hi Sarah,
I hope the following assists you with your query..
6th April 2012 falls on Good Friday
Therefore if payday for weekly payroll usually Friday but brought forward to previous working day in theory it is week 53, and
The next payday would be week 2
HMRC guidance treat payment as if made on normal payday
However if weekly payroll normally paid on Thursday 5 April this is week 53.
Regards
Fern
Paul Wilson says:
February 24th, 2012
15:10
My employer has notified me about a 53 week event this year. They have said that I am likely to owe around £800 in taxes and that the tax office will most likely adjust next years tax code. I am confused because all of my pay packets have the same amount of tax deductions, therefore why would I owe an additional £800 when I have continued to pay tax every 4 weeks, I am assuming that even my 14th pay which will be on April 4th will have the usual tax deductions. How can I owe even more tax than this. Can someone explain this without being to technical please
Ian Holloway says:
February 24th, 2012
15:29
Hi,
I am not sure of the information that you have been given either, however, I am not privy to your pay, tax and tax code information like your employer is.
Do you file a tax return under Self-Assessment? In the normal course of events through the payroll, when a Week 56 happens on a four-weekly payroll, you will receive 56 week’s worth of pay adjustments to reduce your taxable pay, rather than the normal 52. For a PAYE only taxpayer, this is absolutely fine and you are entitled to the extra tax free allowances. However, if you are subject to assessment, HMRC only allow 52 week’s pay adjustment.
If your employer has allowed 56 weeks and HMRC are allowing only 52, you will have received too much in tax free pay and there is likely to be an underpayment of tax. £800 is a large underpayment though – I would ask them to be more specific about how they get their figure and why.
Come back to us and I hope that we can help further.
Kind regards,
Ian
Ian Holloway
Paul Wilson says:
February 29th, 2012
11:31
Hi, below is an copy of an internal memo, I work in civil service and I pay 40% tax. I must admit to being confused about owing more tax if in the 14th pay packet I still pay the usual contributions. Sorry for the long post, not sure how much info is relevant.
Who will be affected?
Employees who are paid on a 4-weekly payroll cycle (with pay days sequenced on 29th
June 2011, 27th July 2011, 24th August 2011, 21st September 2011 etc.)
Employees who are paid on any other sequence of payroll dates will not be affected.
Essential Details
There will be 14 pay days instead of the normal 13 on the payroll cycle
highlighted above in the 2011/12 tax year.
Her Majesty’s Revenue and Customs (HMRC) have prescribed how
organisations must manage this occurrence.
This includes ensuring that your net pay (pay after tax deductions) remains
consistent for the 14th pay day. Therefore has to apply additional personal
allowances (the amount that can be earned tax free) to each individual for that
pay period.
This means that each individual will receive too high a personal allowance for the
tax year 2011/12 resulting in an underpayment of tax that HMRC will seek to
recover once your personal tax position for the 2011/12 year has been fully
assessed.
Collection of the underpayment for the vast majority of people affected will be in
the form of an adjustment to your personal tax code (i.e. spreading the
repayment by increasing periodic tax payments in a future tax year). For a few
individuals it may be in the form of a tax demand (for a lump sum payment).
Indicative levels of tax underpayment are likely to be c. £200 for basic rate
taxpayers and c. £800 for higher rate taxpayers. However, there could be
significant variation on these amounts based on your personal tax position
Ian Holloway says:
March 9th, 2012
15:16
Hi,
Just coming back to you on this one – I have had communication from HMRC which does confirm all that I have said on here before. Whilst your payroll department will, quite rightly, allocate another 4 Weeks’ personal allowance to your 14th payday, this is only for the purposes of ensuring that your net does not fluctuate unexpectedly in this period. HMRC advise that PAYE is only the method by which they provisionally collect a taxpayer’s annual liability. However, there is still an obligation on the taxpayer to meet his statutory obligations, which are that you are only entitled to 52 Weeks’ allowances.
Therefore, whilst your payroll department is following HMRC guidance and allocating additional allowances to prevent a fluctuation in your net pay, HMRC will seek to recover the underpayment if your tax position is subject to Self-Assessment or a PAYE calculation on their computer. If your tax position is not assessed by one of these methods after the end of the tax year, the fact that you have had more allowances than you were entitled to (56 as opposed to 52) will not be picked up.
The Learn Centre have queried this and pointed out the fact that it is completely unjust and unfair that one rule does not appear to be applying to all.
I believe that it is admirable of your payroll department to be pointing this out to employees, however, I cannot confirm the figures that they have provided. I cannot see where they have obtained the figures from but, as they say, variations will apply according to a taxpayer’s personal situation.
I do hope that this helps, even though it may not be the information that you want to hear.
Kind regards,
Ian
Paul Cooper says:
March 21st, 2012
14:50
May I ask something about the satatement made below on the page concerning week 53 payment arrangements.
For determining in which tax week a payday falls, an employee’s payday is the earlier of
•the date on which the payment is actually made, and
•the date on which the employee is contractually entitled to be paid
My question is, given this statement, would a monthly payroll paid on 7th of each month, but paid on Friday 5th October 2012 (as 7th is a Sunday) fall in to month 6? If it really is the earlier of actual or contractual that would seem to be the case, although my sense is that it is not really appropriate to regard the October payroll as month 6 because normal pay day happens to fall on a Sunday.
Paul
Ian Holloway says:
March 21st, 2012
19:50
Hi,
HMRC’s guidance on the taxation of payments has not fundamentally changed from the above rule which you have detailed. However, supplementary guidance was issued by way of the Software Developer’s Notes in December 2006. This was entitled ‘Guidance for the operation of PAYE & Class 1 NIC when the regular date for
payment is a non-banking day’ and would apply in the situation that you detail.
Essentially, if the only reason that you are paying on Friday 05 October 2012 is because you cannot pay on the 7th (as it is a non-banking day), ‘the payment may be treated for PAYE and Class 1 NIC purposes as having been made on the regular payment day’. Follow this link for HMRC’s guidance in this situation:
http://www.hmrc.gov.uk/comp/notes-10-32.pdf
I hope that this helps.
Kind regards,
Ian
Paul Cooper says:
March 22nd, 2012
12:21
Thanks Ian, as you might guess that leads me to the issue of Good Friday occuring on 6 April this year, and I have to admit still to a degree of uncertainty. Can I say that if weekly payments are made on Thurs 5th April because Thursday is always pay day, it is week 53. But if payments are made on Thurs 5th April because Fri 6th (and indeed 7th, 8th & 9th) are non-banking days, it is week 1.
The Software Developer’s notes are helpful up to a point, but then add the line ‘This guidance does not replace or alter the existing guidance in booklet CWG2 about regular paydays falling in week 53 of the tax year’. My problem is that I’m not quite sure what the CWG2 is actually saying about this. It covers payments in week 53 (page 14) but I’m struggling to find something that gives me clarity about my question above.
Ian Congreave’s reply earlier in this sequence refers to us being ‘permitted’ to treat payments that would otherwise have been made on 6 April payday as week 53, which implies a degree of choice about it. Does this mean that the employer, who would have paid weekly on 6 April were it not Good Friday, has the option to treat it either as w53 2011/12 or w1 2012/13.
Kind regards,
Paul
Paul Cooper says:
March 27th, 2012
09:24
Hi,
On a related week 53 matter, suppose an employer runs a 4-weekly payroll, and pays week 52 on 23 March. Is it permissable for them to then run a week 53 payroll (paying one weeks money) on 30 March? They then return to the 4 weekly cycle in the new tax year.
I’d welcome any views on this.
Thanks,
Paul
Doris says:
March 27th, 2012
11:03
I process the payroll on Wednesday and pay into the employees bank account on the Friday. Our week runs from Friday to Thursday and is paid in arrears, ie payroll processed on Wed 27 March is for w/e Thursday 22/03/12. Is it correct that this is being processed as week 52?
Ian Holloway says:
March 27th, 2012
15:53
Hi Paul,
Sorry for the delay in reply.
Regarding your query from 22 March. I am going to try and address this paragraph by paragraph.
In your first paragraph, you are absolutely correct. If the payment is due on Thursday 05 April 2012, it would be classed as Week 53. If the payment was being paid on Thursday 05 because it was not possible to pay it on the 06th, you could tax it as Week 1.
Regarding your second paragraph, are you looking for some other HMRC guidance / information as to what Week / Month number applies when a payment is made on a non-banking day? With regard to your specific wuestion about a payment being made on 05 October as opposed to 07 October (because 07th is a Sunday), HMRC’s Website says say ‘If an employee’s regular payday falls on a non-banking day (a Saturday, Sunday or bank holiday) and you pay them on the last working day before their regular payday, or the next working day after their regular payday, you may still treat the payment for PAYE (Pay As You Earn) purposes as having been made on the regular payday’.
Re your third paragraph, you are again correct. The Developer notes grant a concession that you may treat a payment on 05 April 2012 as Week 1 if you want to (as long as the payment was actually due on the 06th). As you say, they give you the choice. If it is easier and less administration for you to treat it as Week 1 rather than Week 53, you can do this. If you decide not to, the only problem that you have is that the payment due on Friday 13 April 2012 would be Week 2. You would have started the tax year at Week 2 rather than Week 1.
I do hope that this helps but please come back if I can provide any further information.
Kind regards,
Ian
Ian Holloway says:
March 27th, 2012
16:03
Hi Paul,
Re your query today about a 4 weekly payroll, then paying for 1 week, then returning to 4 weekly.
I have never seen this in practice but guess that this would be possible if employees agreed to it and contracts were amended changing the pay periods.
Why would an employer want to do this? Without thinking about it too deeply, I would have thought that this was opening a can of worms which always comes with a Week 53 – too much given as tax allowances and too much NICs paid.
Probably be an interesting one for future discussion and I bet the Employment Rights Act 1996 would have to be considered somewhere along the line.
Kind regards,
Ian
Paul Cooper says:
March 28th, 2012
14:59
Hi Ian,
A can of worms indeed! In this case the employer’s motivation in wanting to add this week 53 is to help keep their payroll costs in line with their accounting year. Since my original note I’ve rather shifted my view as it seems the whole purpose of week 53 is to accommodate the fact that a year is inconveniently longer than 52 weeks! My example involved paying week 53 on 30 March when really it can only be appropriate when pay day is the 4th or 5th April. Whilst I can understand what the employer was trying to achieve I’m not sure being that creative with the week 53 concept is the way to do it! A supplementary week 52 payment might pehaps be their better solution.
Kind regards,
Paul
Ian Holloway says:
March 30th, 2012
05:46
Hi Paul,
I can understand what the employer is trying to do, however, even if they got it into line with their accounting periods for this year, there is evetry chance that it will go out of line again in the future. Maybe converting the lunar payroll into a monthly would be better.
The Week 53 is, primarily, as you say, coping with the situation where one year is longer than the other and ensuring that the next tax year starts in the correct week. Akso, by allocating additional allowances, the net pay is regulated and stable in this ‘extra’ week. It is the addition of the extra tax free allowances that is the main problem with this and the fact that HMRC may identify that there has been an underpayment of tax.
Kind regards,
Ian
Gerry Mac says:
April 5th, 2012
07:16
Can you advise why my hushand – who is paid weekly, lost a full days pay this week because of the 53 week tax year?
Ian Holloway says:
April 5th, 2012
07:24
Hi,
Was it his gross pay that was reduced by one day? A Week 53 payment should have no impact at all on a person’s net pay (compared to a Week 52 payment) unless there is a variation in the gross pay or the tax code number.
Come back to us with more information and ,hopefully, we will be able to advise further.
Kind regards,
Ian
Richard says:
April 7th, 2012
00:38
Hi,
My wife was, until 2nd April 2012, working for an agency who paid 1 week in arrears. The number of hours worked each week varied and during the last tax year she earned below the threshold for paying tax at 40%. Pay was always paid into my wife’s bank account on the Thursday following the week worked. Her last week of work for the agency was week ending 30th March and, as usual, her pay was paid into her account on Thursday 5th April. However, the amount paid net of tax was lower than the previous week (for which she earned the same amount of gross income) and when I looked at her payslip I realised that this was because the date on the payslip is given as Friday 6th April and the Tax Period is given as Week 1. Because this was my wife’s final week of work with the agency they have “annualised” this single week of gross income and this amount is above the 40% threshold and as a result they have deducted an element of tax at 40%. My wife started work for anothet company on 2nd April and now finds herself having already “earned” taxable income in the current tax year which may have financial implications for tax purposes towards the end of the 2012/13 tax year.
My first question is, has the agency made an error in classing this as a Week 1 period rathe than Week 53? (since they paid my wife into my wife’s account as usual on Thursday (in this case, the 5th April). And my second question is, can this now be rectified so that the income is classed as earnings in the last tax year and not as in the current one (and if so, is this something we need to persue with the agency or HMRC?).
Many thanks
Richard
Kath says:
April 9th, 2012
09:17
Our week runs Saturday to Friday and i pay the boys the following Thurday so we 52 was paid on the 5th of April 2012 can i use week 53 to cover the hours worked from 31st March to 6th April
Ian Holloway says:
April 10th, 2012
08:58
Hi Kath,
With regard to your query, the payment for the wages from 31 March to 06 April would not be due until 12 April as I understand it. This is Week 1 and you should not use Week 53.
I hope that this helps.
Kind regards,
Ian
Ian Holloway says:
April 10th, 2012
09:37
Hi Richard,
In response to your query:
1
If the pay was due and paid on 05 April 2012, I cannot see any reason why this was classed as Week 1 rather than Week 53. The only reason I can see it would have been Week 1 is if the pay had actually been due on 06 April 2012 and it was being paid on the 5th is simply because the 6th was a non-banking day.
2
I am not sure what you mean by the term ‘annualised’, however, the main issue, as you rightly suggest, is that I believe these are earnings in the 2011/12 tax year and not the 2012/13 tax year. Therefore, your first port of call is with the agency to find out why they used Week 1 instead of Week 53.
Come back to us when you have this information. I am intrigued now.
Kind regards,
Ian
Emma H says:
June 19th, 2012
12:43
I’ve just started using the HMRC calculator as I now only have two members of staff with the rest being sub-contractors. We work from Monday to Sunday, I process the payroll the following Wednesday and they receive into bank on the Friday on a weekly basis.
I’m now doing the return or month 2 but the P11D is showing the week 9 (pay date Sunday 3rd June 2012) as falling into the following month (month 3). Am I using the wrong date? I used sage before and always altered the process date to the end of the pay week ie. the Sunday. I didn’t have 53 weeks last year as the week 52 was dated 1st April and then week 1 was dated 8th April. It’s just always made sense to me that the payroll weeks are dated the same as the week they apply to as far as all other accounting goes, like costings etc. Any help very gratefully received, thank you.
Ian Holloway says:
June 20th, 2012
10:29
Hi,
Are you talking about the monthly payment to the Accounts Office? Week 9 would fall into Month 03 so Month 02 would be a 4 week Month.
Is this any help?
Kind regards,
Ian
Martyn says:
December 31st, 2012
12:54
Hi
we operate a weekly and 4 weekly payroll.
in the 2012/13 tax year week 52 has a weekending date of 23rd March 2013. The payday for both payrolls would have been Friday 29th, but i think that this is good friday so we will be paying it on the 28th.
However the next scheduled weekly pay day will be the following friday 5th April, which reading this article means that that this will be payment for week 53. Is that correct?
the next scheduled 4 weekly pay day is due to be on Friday 26th April. this will be the 3rd weekly payroll of the new tax year.
what does this mean to the week numbers for the tax weeks?
is week 1 of the 2013/14 tax year 30th March for the 4 weekly payroll and 6th April for the weekly payroll? or is it something different?
Ian Holloway says:
January 2nd, 2013
17:34
Hi,
Just looking at your dates here, it looks as though you will be having a Week 52 for both the weekly and 4-weekly on 28 March 2013. However, as you say, there is one more weekly payroll to pay in the tax year on 05 April 2013, and that should be processed as Week 53.
Again, as you say, Week 1 of the tax year will effectively start on 30 March for the 4-weekly, with payday on 26 April 2013 being Week 4. The weekly payroll will have Week 1 starting on 06 April and payday 26 April 2013 will be Week 3.
Because of the tax calendar, this does look strange, I agree.
Hope that this helps.
Kind regards,
Ian
Andrew says:
March 25th, 2013
16:59
Although a week 56 is allowed where there are 14 four weekly payrolls in a tax year, there is no provision in statute that allows additional free pay to be given. This will be clawed back by the Inland Revenue through a change to individual tax coding because tax deducted will not be sufficient against annual earnings when an assessment is made.
Ian Holloway says:
March 26th, 2013
07:40
Hi Andrew,
You are exactly right in what you say.
Kind regards,
Ian
Sarah Henderson says:
March 26th, 2013
14:09
Hi We have a week 53 this year, should the tax codes for this 53rd weeks be cumlative or week 1 month 1?
Thanks
Sarah
Ian Holloway says:
March 26th, 2013
14:56
Hi Sarah,
Always Week 1 – see http://www.hmrc.gov.uk/paye/payroll/paydays/week-53.htm.
Hope this helps.
Kind regards,
Ian
The Learn Centre
Vanessa Culbert says:
March 28th, 2013
18:55
Hi, I have a question and please bear in mind I am new to payroll! The employees are currently paid fortnightly. They were paid today for work done upto 23rd March. It has been decided that as from April they will be paid monthly on the 20th. Can I put through week 53 as a single week for the work done upto 30th March and paid 5th April. This tidies up 2012-13 year, and allows a new start to monthly 2013-14 year.
I can’t understand how it would work on the fortnightly pay from Mon 25th March to Sat 6th April (paid 12th April), as it covers 2 tax years (as I see it).
Carl says:
April 5th, 2013
07:04
In trying to understand if we have a week 14 as i get paid four weekly
my last payment was on Friday 29th March
My employer are saying we dont get an additional weeks wage this week 5th April 2013 and will continue to pay us every four weeks
Is this correct or should my employer be paying me an extra weeks wage ?
thank you
Carl
Ian Holloway says:
April 5th, 2013
07:40
Hi Carl,
Your employer is correct as you are only due to be paid your wages up until 05 April 2013 in your next 4-weekly pay packet. An employer does not have to pay all monies actually earned in the tax year (i.e. 06 April to 05 April the following year) in the same tax year. This is the way that I am paid as well. Even though there is a portion of the tax year for which I have not been paid yet, I know that I will get this in my next pay packet in the 2013/14 tax year. In the first pay packet, I will actually be paid for 2 weeks work done in 2012/13 and two weeks done in 2013/14.
This is the way the tax system works. Pay dates are not aligned with the tax year. Even if you were monthly paid, your payment for March would, probably, have been for the period 1 – 31 March and your payment for April for 1 – 30 April (part one tax year and part the next).
I hope that this helps.
Kind regards,
Ian Holloway
The Learn Centre
Ian Holloway says:
April 5th, 2013
07:49
Hi,
I apologise for the late reply.
You are obviously going through a period of restructure and realignment of your pay periods. Firstly, it is not necessary for the payment that is being made to relate strictlty to the tax year in which the work was done. A monthly payroll in April will often pay from the first to the last day of the month and this spans two tax years. this is perfectly fine.
I would have said that the ‘balancing’ payment you want to make up to the 30th of March should be paid as a Week 54 not a Week 53. These employees are fortnightly paid (at the moment) and their pay periods always increment in steps of two. However, I do not see a big problem doing a Week 53, even though this might represent a change in contract (fortbightly paid to the 23rd, then weekly paid for 24th to 30th and then monthly paid from April).
What did your software provider advise?
Kind regards,
Ian Holloway
The Learn Centre
Jamie says:
April 6th, 2013
05:59
Hello, hope this is okay to ask as an employee? I am a contractor going through an umbrella company. Although I send weekly timesheets and the company I work for pay weekly,I get paid monthly.
This month (on Friday, 5 week month), i`ve got a huge tax deduction. Umbrella company say this is because of Wk53, i need to contact HMRC, but will not or cannot tell me if i`m due anything back.
Any thoughts? I`m very disappointed with their attitude, they tell me it`s not their issue, but i`m being impacted.
Thanks, Jamie
Ian Holloway says:
April 9th, 2013
12:02
Hello Jamie,
On the information that you have provided, obviously I am unable to check a tax calculation for you. However, I would be surprised if the reason for a large tax deduction was as a result of the operation of a Week 53 situation. Indeed, the whole purpose of a Week 53 is to ensure net pay smoothing, whereby the employer gives the employee additional tax allowances in this extra week in the tax year.
Plus, you say that you are monthly paid anyway. As I understand it for your E-Mail, this means that some months you are paid for 4 weeks and some for 5 weeks. If you are monthly paid, there is no such thing as a Week 53.
Please feel free to come back and we will do our best to help.
Kind regards,
Ian Holloway
The Learn Centre
Jamie says:
April 20th, 2013
06:53
Thanks Ian I fear i`ll not get to the bottom of this, but hmrc have indicated a refund is due, but there is no logical explanation why from the Umbrella company. Fingers crossed!