News Items – at 24th September 2007

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See Payroll FAQ's Below

Payroll deadlines during the next month

October 5 – This is the final day of tax month 6.  Tax and NICs etc for payments made in the tax month to October 5, or in the tax quarter to October 5, are due for payment to the Accounts Office by October 19, or by October 22 if paid electronically.

October 19 – This is the deadline for payment of tax and NICs to the Accounts Office, for tax month 6 by employers who pay monthly, for tax months 4 to 6 by employers who pay quarterly, unless they make their payments electronically.

October 19 – This is the deadline for payment of tax and Class 1B NICs to the Accounts Office in respect of PAYE Settlement Agreements for the 2006/07 tax year, unless they make their payments electronically.

October 21 – For employers who pay their tax and NICs, including Class 1B NICs,  to the Accounts Office electronically, this is the deadline for electronic payments to be cleared into the HMRC bank account.  Payments through BACS must be initiated by October 18 at the latest.

Payroll FAQ's

Week 53 This Year?

Why are there 53 paydays this year and how do we handle the payments?

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 2007/08 tax year (which has 366 days), the first payday is Friday, 6 April or Saturday, 7 April 2007 and the last payday is Friday, 4 April or Saturday, 5 April 2008.
• in the 2008/09 tax year, the first payday is Sunday, 6 April 2008 and the last payday is Sunday, 5 April 2009.
• in the 2009/10 tax year, the first payday is Monday, 6 April 2009 and the last payday is Monday, 5 April 2010.

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 headed “Payment in Week 53”.  The final tax code shown on the P14 should be the tax code used for the extra payday, e.g. 522L W1.  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.  Some payroll systems recognise the situation automatically; others 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.

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