If you pay your employees weekly, fortnightly or every 4 weeks, rather than every calendar month, you might need to make a ‘week 53’ payment in your final full payment submission of the year.
For the 2018/19 tax year, tax week 53 is Friday 5 April 2019.
You will have a week 53 if the following applies:
Your normal pay day is a Friday and…
- You last processed your weekly paid employees on Friday 29 March 2019.
- You last processed your fortnightly paid employees on Friday 22 March 2019.
- You last processed your four weekly paid employees on Friday 8 March 2019.
- These are the only scenarios where a week 53 must be processed. The next processing date for all other pay dates falls into the 2019/20 tax year.
How tax and national insurance calculates at week 53:
To comply with government legislation, tax calculates using a week 1 / month 1 free pay allowance. This ignores previous pay and tax and calculates on a non-cumulative basis. Non-cumulative means that the employee’s year to date figures aren’t included in the tax calculation. Instead, at week 53, tax is calculated as if it’s the first pay run of the tax year.
This protects the level of take home pay that the employee receives. This is perfectly normal, and follows HMRC rules and calculates tax correctly at week 53.
For employees, national insurance (NI) is calculated as in any other pay period, using the weekly, two weekly or four weekly thresholds, as appropriate.
For directors using the table method, their NI recalculates in week 52 cumulatively using the annual thresholds. It then calculates cumulatively again in week 53 still using the annual thresholds. For directors that use the year to date method, their NI for week 53 is calculated cumulatively as in any other pay period.
How might this affect an employee in the following tax year?
Because the employee has been given an extra amount of tax-free pay in one year then HMRC will offset this by reducing the amount of tax free pay they receive in the following year. Typically HMRC achieve this by adjusting the tax code of the employee. In such cases HMRC will contact both the employee and the employer to advise them of the tax code change.
HMRC may issue a P800 form to any employee that owes tax following a ‘week 53’ payment, which explains how their tax has been calculated.