Q. What is an extra pay period (week 53) ?

Week 53 occurs in a weekly payroll when there are 53 pay days in the tax year. There are normally 52 pay periods in a weekly payroll, but in some years the dates fall in a way that gives rise to an ‘extra’ pay period’.

An extra pay period can also occur in fortnightly and four-weekly pay frequencies:

Fortnightly payrolls normally have 26 pay periods, but can occasionally have 27.

Four-weekly payrolls normally have 13 pay periods, but can occasionally have 14.

Employees are entitled to tax credits for the extra pay period, but only on a Week 1 basis.

This means that the employee receives more than the year’s total tax credits. The Inspector of Taxes will take this into consideration when issuing the next year’s tax credits.

An employee receives an insurance week for the extra pay period only if they have not already received the maximum 52 insurance weeks. You need to enter this insurance week in the Timesheet Entry screen if necessary.

Q. Do I have an extra pay period?

After you have fully completed Week 52 (or Fortnight 26, or Four-Weekly Period 13), check the date on which the next payday occurs.

If the next payday falls on the 31st December, you have an extra pay period.

If the next payday occurs on or after the 1st January, you DO NOT have an extra pay period. This pay period must be processed as Period 1 of the new tax year.

Incorrect processing of an extra pay period may result in inaccurate returns for that tax year.

Only the date of payment (not the date of work) determines whether a pay period is ’extra’ in the current year. So if you have a pay date of 03/01/2011, this must be processed as Period 1 of 2011, regardless of when the actual work for this period was done.

Q. Should I run a week 53 over the christmas period?

Generally, the answer to this question is ’No’. You only run a Week 53 when there is an extra pay period to be processed in the tax year, regardless of any other circumstances.

Q. My employees are on holiday over the Christmas period. Should I run a Week 53 to ensure they get their holiday pay before their holiday begins?

If the pay date for the holiday week falls in January rather than December, the holiday week is not an extra pay period, and must be processed as a normal week in period 1 of the new tax year.

If Week 1 of the new year is a holiday week, and you still want to pay your employees for this week in advance of their holidays, carry out the following steps:

· complete the current tax year

· run the Payroll Year End in full

· set Period 1 of the new year

This can be done at any time after you have installed the Payroll Year End Update.