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Some employers with weekly, fortnightly and four-weekly pay frequencies have a Week 53 situation to handle at the end of the 2006/07 tax year. Both 6 April 2006 and 5 April 2007 fall on Thursdays. As a result, the wages paid on 5 April 2007 must be handled as week 53, 54 or 56 payments, as appropriate. PAYE tax is applied non-cumulatively as if it were Week 1, 2 or 4 respectively.
However, a unique complication arises in 2007 - one that never occurred in the 20th century and will not happen again until 2091*. Three events combine to create this unusual situation, namely
- the first day of the 2007/08 tax year is a Friday, the most common payday,
- that day is a bank holiday, and
- the 2007/08 tax year includes a leap day.
The first day of the 2007/08 tax year, Friday, 6 April 2007, is Good Friday and, therefore, a bank holiday. It will not be possible to pay employees direct into their bank accounts on that day and, if the employer decides to make the payment earlier, e.g. on Thursday, 5 April 2007, the payment will be made in the 2006/07 tax year. As the tax week for PAYE calculations is determined by the date on which the payment is made (where that is earlier than the date on which the payment is contractually due), that payment will also have to be calculated as a week 53, 54 or 56 payment in the 2006/07 tax year.
In the case of weekly-paid employees, the next payment will be made on Friday, 13 April 2007 (sic). As that falls in tax week 2 and there has been no payment for week 1, the payment for week 2 for employees taxed cumulatively will have two amounts of 'free pay'.
This situation has a knock-on effect at the end of the 2007/08 tax year. Where Friday, 6 April 2007 is a payday (or would be other than for this complication), the payday a year later, on Friday, 4 April 2008, will also be in a week 53, 54 or 56, depending on the pay frequency.
And, as 2008 is a leap year and the 2007/08 tax year therefore includes a leap day (29 February 2008), we must not forget those employers with a Saturday payday. As Saturday, 7 April 2007 and Saturday, 5 April 2008 are both paydays, there will also be a week 53, 54 or 56 at the end of the 2007/08 tax year for them as well.
In summary, therefore, employers that pay wages weekly, fortnightly or four-weekly with paydays that fall on Thursdays, Fridays or Saturdays must consider carefully the Week 53 implications at the end of the 2006/07 tax year and at both the start and the end of the 2007/08 tax year.
- Employers for whom Thursday, 5 April 2007 is a payday have a Week 53 situation to handle at the end of the 2006/07 tax year.
- Employers for whom Friday, 6 April 2007 is a payday but who bring forward the payday because they cannot pay into bank accounts on that day
- have a Week 53 situation at the end of the 2006/07 tax year,
- must calculate the wages paid on Friday, 13 April 2007 as tax week 2 of 2007/08, and
- have a Week 53 situation at the end of the 2007/08 tax year.
- Employers for whom Saturday, 7 April 2007 is a payday have a Week 53 situation to handle at the end of the 2007/08 tax year.
* Good Friday also fell on the first day of the tax year in 1917 and 1928 and will do so again in 2012. However, those tax years do not include a leap day.
...back to 5 October 2006
Further information:
Notes for Payroll Software Developers
Frequency of the Date of Easter 1875 to 2124 |
For Payroll and Human Resource Professionals
