The 2018/19 tax year started on a Friday — Friday 6 April 2018; it also ends on a Friday – Friday 5 April 2019.
Where employees are paid in multiples of a week, their payday often falls on a Friday. As a result, where the last pay day in the 2018/19 tax year is Friday 5 April 2019, depending on their pay frequency, some employees may have an additional payday in 2018/19; there are 53 paydays for weekly paid employees, 27 for fortnightly paid employees and 14 for four-weekly paid employees.
The additional payday is referred to as ‘Week 53’ for weekly paid staff, ‘Week 54’ for fortnightly paid staff and as ‘Week 55’ for four-weekly paid staff. Where employers are required to make an additional payment in 2018/19, it is important that they know how to treat is correctly.
Under the PAYE system, an employee’s allowance is spread evenly throughout the year by allowing the employee a certain amount of ‘free pay’ each time that they are paid. For week 53, 54 and 55 payments, the employee benefits from an additional amount of free pay; achieved by using a non-cumulative basis for that payment only. The free pay is determined as if the payment were, respectively, a week 1, week 2 or week payment. The exception to this rule is if the cumulative pay for the year to date is less than the employee’s personal allowance, in which case, tax should be computed on a cumulative basis.
Your payroll software should identify week 53 payments, but check whether it is necessary to set an indicator to recognise the additional week. The correct week number (53, 54 or 55) should be entered on the FPS.
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