A 53-week payroll occurs when there are 53 weekly pay days in a tax year rather than the usual 52. This happens when your regular pay date falls on the 5th April (the last day of the tax year) resulting in the number of days in the tax year not dividing into a whole number of tax weeks.
For example, in the 23/24 tax year there were 53 Thursdays and 53 Fridays, so if you are weekly paid on either a Thursday or Friday then you will have received 53 payments in the 23/24 tax year.
This doesn’t just affect weekly paid employees, it can affect employees with different pay schedules who were paid on the 5th April too, for example if you are fortnightly paid, you may have received 27 payments instead of the usual 26 and also, if you are 4 weekly paid you may have received 14 payments instead of 13.
The biggest implication of a 53-week payroll year is that it may affect your tax position.
The way PAYE works and how tax is calculated means that in a 53-week payroll year your tax-free allowance will continue to be divided by the usual number of pay days in a regular payroll year, for example if you are weekly paid your weekly tax-free allowance will continue to be 1/52 of your annual tax-free allowance despite having 53 pay days. So, when you reach week 53 all of your tax-free allowance has essentially been “used up”. In this instance HMRC instructs employers to give employees an extra amount of tax-free pay for week 53 payments, this ensures that employees take home pay remains consistent. However, this does mean by the end of the tax year you may have received more tax-free pay than the standard tax-free allowance and if this is the case you will have underpaid tax.
Once the tax year ends HMRC may seek to recover this underpayment and could send you a P800 – End of Year Tax Calculation, this letter details any over or underpaid tax and will also give you details of the next steps to take.
If you do receive this letter, you may think that you employer has made an error, but they have most likely adhered to HMRC’s guidance, and it is just the unfortunate consequence of having 53 (or 27 or 14) pay days in a tax year.
IMPORTANT
If you receive a P800 from HMRC it’s important to read it carefully, check all the information is correct and follow any instructions in the letter. If you have any questions, you can contact HMRC’s helpline using the number on the letter, or via the HMRC App which you can download free of charge from the Appstore or Play.
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