Week 53 payments apply to employees that you pay on a weekly, fortnightly or four-weekly basis and whose final pay date of the year falls on 30 or 31 December. They arise every five or six years, due to the fact that a standard year has 52 weeks and one (1) day.
This year has a week 53 scenario, so to ensure that your employees get tax credits and deductions and so reduce the amount of tax they pay, we’ve made this blog post to guide you on the steps to follow.
Weekly / Fortnightly Employees Whose Pay Dates Don’t Fall on Friday, 1 January 2021.
By week 52 of the tax year, an employee taxed on the cumulative basis has exhausted his or her annual allowances, tax credits and rate bands. This means that if week 53 continued to be taxed in the same way, your employees would experience a drop in their take home pay.
To get around this, the submission for Week 53 needs to be done on a week 1 basis for your non-monthly paid employees.
To do this, all you need to do on SimplePay is:
- Ensure you have the correct / latest RPN or the relevant employees; and
- complete your submission to Revenue for the relevant period.
Your employees will receive additional amounts of tax credits and rate bands, proportional to their pay frequency to accommodate the extra submission (e.g. an increase of 1/52 the value of the credits and deductions is provided for weekly paid employees).
Weekly / Fortnightly Employees’ Whose Pay Date Falls on Friday, 1 January 2021.
You are normally required to report your employees’ pay to Revenue on or before their pay date. However, if you pay your non-monthly paid employees on a Friday, the week 53 pay date falls on Friday, 1 January 2021, which is a bank holiday.
Where an employee’s pay date falls on a bank holiday you’re allowed to pay your employees on the previous working day (i.e. Thursday 31 December 2020). If this applies to some of your employees, you must do the following:
- Ensure you have the correct / latest RPN or the relevant employees;
- Record the pay date as 1 January 2021 and NOT 31 December 2020
- Complete your submission to Revenue for the relevant period.
SimplePay will use the RPN to calculate the amounts due, based on the 2021 credit rates and rate bands. Because this allows the use of 2021 rates, the payment falls in the 2021 tax year and so it is not a week 53 payment.
Reminder for 2021 Payroll Submissions
At the start of each year the RPNs from the previous year will expire, meaning that for us to calculate your employees’ tax liability, we need you to create / request a new RPN for the new year. The default until this has been completed is to process tax on the emergency basis, so we would strongly recommend you do this before making any payments or submissions for 2021.
As we like to make your life easy, SimplePay allows you to do this as one single bulk action. All you need to do is sign into your SimplePay profile and go to:
- Employees > Bulk Actions > Update RPNs.
- Use the checkboxes next to the employees’ names to select which employees you wish to request an RPN for.
- Click Create / Update at the top of the screen.
That’s it, you’re then ready to complete your first pay run of 2021. Easy! More information on this can be found on our help site page, linked here.
We hope that you have found the above information useful. If you have any questions on how the information above relates to SimplePay, please feel free to contact us at [email protected].
Equally, if you are not yet a client of SimplePay but would like to be, or if you’d like to know how we can take the effort out of filing and calculating payroll, get in contact with us or visit our website: www.simplepay.ie.
Keep well and stay safe.