YOUR FINAL PAYROLL-ENDING AND STARTING YOUR TAX YEAR CORRECTLY

Your Final Payroll-Ending your tax year correctly

With Payroll Modernisation, it is the date that your employee is paid, that is the most important date and not when the employee has worked. This payment date determines the pay period in which wages are paid and therefore determines if you will have a Week 53 in any given Tax Year.

 

Week 53 occurs where 1 January and 31 December are paydays and a total of 53 pay days arise in the year. Similarly, in a leap year, ‘week 53’ occurs where a pay day falls on 1 or 2 January and 30 or 31 December and there are 53 pay days in the year.

If you are processing wages for employees who worked in December, but you are actually making the payments in January, then these wages must be run in the new years' Payroll software, using the employees RPN’s released in the new Tax year.

Any payments that you make to your employees dated from the 1 January onwards must be reported to

Revenue in the relevant Tax Year as the tax liabilities will be incurred in that Tax Year.

For example, if you are processing your Final December wages on the 28 December 2023, but your employees actually receive the payment on the 2 January 2024, then Revenue will consider this to be a 2024 payment and must be recorded in your 2024 Payroll Software.

You must make sure that all of your 2023 wages are actually paid to your employees before the 1 January 2024, with one small caveat here. *

If your normal payday coincides with the 1 January, which is a banking holiday, then, as per Revenue you are allowed to pay the wage the previous banking day. So let us use 2020 as an example. The normal pay day is on a Friday and the last December wages would be due to be paid on the 1 January 2021. This can be paid on the 31 December 2020, HOWEVER, this must still be captured as Week 1 wage on the 1 January 2021 in the 2021 Payroll Software

Revenue also published a Hot Topics document about this issue and while the document refers to the transition of 2018 to 2019, the same principles apply as rollover from 2021 to 2022 and so on.

For more information please refer to Page 83, section 10.12 of the new 2019 “Employers Guide to PAYE” published by Revenue.

It is vitally important that you select the correct payment date. Your Payment Date is used to determine what tax credits and cut off points are to be used for cumulative calculations by specifying the week number (or month number) up to which credits are calculated.

 

The Payment Date is the date on which the employer is due to process the wages and make the payment to the employee.

Note: Under PAYE Modernisation the Payment Date now has special significance because all employers are now required to file their Payroll Submission “On or Before” the payment date. Failure to do so is in breach of the new regulations and may incur penalties.

Breakdown of payment dates and paydays for running weekly wages 2023 & 2024:

Payment day	Monday	Tuesday	Wednesday	Thursday	Friday
Weekly	Fortnightly	2023	2024	2023	2024	2023	2024	2023	2024	2023	2024
Week 1	Period 1	2 Jan	1 Jan *	3	2	4	3	5	4	6	5
Week 2	Period 1	9	8	10	9	11	10	12	11	13	12
Week 3	Period 2	16	15	17	16	18	17	19	18	20	19
Week 4	Period 2	23	22	24	23	25	24	26	25	27	26
Week 5	Period 3	30	29	31	2330	1 Feb	31	2	1 feb	3	2
Week 6	Period 3	6	5	7	6	8	7	9	8	10	9
Week 7	Period 4	13	12	14	13	15	14	16	15	17	6
Week 8	Period 4	20	19	21	20	22	21	23	22	24	23
Week 9	Period 5	27	26	28	27	1 Mar	28	2	29	3	1 Mar
Week 10	Period 5	6	4	7	5	8	6	9	7	10	8
Week 11	Period 6	13	11	14	12	15	13	16	14	17	15
Week 12	Period 6	20	18	21	19	22	20	23	21	24	22
Week 13	Period 7	27	25	28	26	29	27	30	28	31	29
Week 14	Period 7	3 Apr	1 Apr	4	2Apr	5	3	6	4	7	5
Week 15	Period 8	10	8	11	9	12	10	13	11	14	12
Week 16	Period 8	17	15	18	16	19	17	20	18	21	19
Week 17	Period 9	24	22	25	23	26	24	27	25	28	26
Week 18	Period 9	1 May	29	2	30	3	1 May	4	2	5	3
Week 19	Period 10	8	6	9	7	10	8	11	9	12	10
Week 20	Period 10	15	13	16	14	17	15	18	16	19	17
Week 21	Period 11	22	20	23	21	24	22	25	23	26	24
Week 22	Period 11	29	27	30	28	31	29	1 Jun	30	2	31
Week 23	Period 12	5	3 Jun	6	4	7	5	8	6	9	7
Week 24	Period 12	12	10	13	11	14	12	15	13	16	14
Week 25	Period 13	19	17	20	18	21	19	22	20	23	21
Week 26	Period 13	26	24	27	25	28	26	29	27	30	28
Week 27	Period 14	3 Jul	1 Jul	4	2	5	3	6	4	7	5
Week 28	Period 14	10	8	11	9	12	10	13	11	14	12
Week 29	Period 15	17	15	18	16	19	17	20	18	21	19
Week 30	Period 15	24	22	25	2	26	24	27	25	28	26
Week 31	Period 16	31	29	1 Aug	30	2	31	3	1 Aug	4	2
Week 32	Period 16	7	5	8	6	9	7	10	8	11	9
Week 33	Period 17	14	12	15	13	16	14	17	15	18	16
Week 34	Period 17	21	19	22	20	23	21	24	22	25	23
Week 35	Period 18	28	26	29	27	30	28	31	29	1 Sep	30
Week 36	Period 18	4	2 Sep	5	3	6	4	7	5	8	6
Week 37	Period 19	11	9	12	10	13	11	14	12	15	13
Week 38	Period 19	18	16	19	17	20	18	21	19	22	20
Week 39	Period 20	25	23	26	24	27	25	28	26	29	27
Week 40	Period 20	2 Oct	30	3	1 Oct	4	2	5	3	6	4
Week 41	Period 21	9	7	10	8	11	9	12	10	13	11
Week 42	Period 21	16	14	17	15	18	16	19	17	20	18
Week 43	Period 22	23	21	24	22	25	23	26	24	27	25
Week 44	Period 22	30	28	31	29	1 Nov	30	2	31	3	1 Nov
Week 45	Period 23	6	4	7	5	8	6	9	7	10	8
Week 46	Period 23	13	11	14	12	15	13	16	14	17	15
Week 47	Period 24	20	18	21	29	22	20	23	21	24	22
Week 48	Period 24	27	25	28	26	29	27	30	28	1 Dec	29
Week 49	Period 25	4	2 Dec	5	3	6	4	7	5	8	6
Week 50	Period 25	11	9	12	10	13	11	14	12	15	13
Week 51	Period 26	18	16	19	17	20	18	21	19	22	20
Week 52	Period 26	25	23	26	24	27	25	28	26	29	27
Week 53	Period 27	NO WEEK 53 WAGE	30 Week 53	NO WEEK 53 WAGE	31 Week 53	NO WEEK 53 WAGE	NO WEEK 53 WAGE	NO WEEK 53 WAGE	NO WEEK 53 WAGE	NO WEEK 53 WAGE	NO WEEK 53 WAGE

Taxation Basis in a Week 53

Generally, wages run in a Week 53 will be taxed on a Week 1 taxation basis. The exception is where an employee is currently being taxed on an Emergency Taxation basis- refer to the below table.

Payroll Basis	Weekly Paid	Fortnightly Paid	4 Weekly Paid
Payroll is currently operating on a Cumulative Taxation basis	Run Week 53 with a Week 1 taxation basis	Run Week 53 with a Week 1 taxation basis	Run Week 53 with a Week 1 taxation basis
Payroll is currently operating on a Week 1 Taxation basis	Continue with Week 1 Taxation basis	Continue with Week 1 Taxation basis	Continue with Week 1 Taxation basis
Payroll is currently operating on an Emergency Taxation basis	Continue to apply the Emergency Basis	Continue to apply the Emergency Basis	Continue to apply the Emergency Basis

Where ‘Week 53’ occurs, the employer should use tax credits and the cut-off point against that payment on a non-cumulative basis (week 1/month 1 basis) as per the following table:

Pay day falling on 31 December ( or in a leap year, on 30 or 31 December)
Number of pay days in a Tax Year is:	Taxation basis is:
53 Weekly	Week 1 as per the above table
27 Fortnightly	Week 1 as per the above table
14 four-Weekly	Week 1 as per the above table

LPT Deductions in Week 53
Where an extra pay period occurs in the year, for example, 53 weekly pay periods, Collsoft Payroll will deduct the total amount due over 52 weeks, leaving the 53rd week free of LPT deduction.


In Collsoft Payroll, LPT is calculated and deducted as per the following table:

Pay Frequency	LPT Calculations and Deductions
Weekly	52 deductions
Fortnightly	26 deductions
Four- Weekly	13 deductions
Monthly	12 deductions

Your first Payroll-starting your tax year correctly
It is important that the initial pay period is set up correctly as this will affect each subsequent pay period and may create an issue at the end of the Tax Year if set incorrectly in the initial period.

Many employers will normally return from their Christmas Holidays on the 1st Monday of the Year, which is often not the 1st January. Then payroll is normally run in the second week of January.
From a Revenue perspective, Payroll Week 1 dates from 1 January to 7 January. Remember this is the payment date not the period worked, so if your payment date is between the 8th and 14th January, then this is considered to be a Week 2 pay date. You can again refer the Breakdown of Pay dates created earlier on in this document.
Under the PAYE regulations, employees are entitled to tax credits up to the date of payment, so in the event that you do not have any wages run in Week 1, but start in Week2, then the employees would be entitled to two weeks tax credits.

We strongly advise against capturing wages in the incorrect Revenue Week. Revenue have made changes to submission, effective from January 2020. All submission now include both the payment date and the week number.

Tax must be deducted or refunded in accordance with the Tax credits and Standard rate cut-off points and the Tax rate applicable at the time the payment is made. This is true, even if all or apart of the wage was earned or treated as earned in a previous or coming tax Year. Excerpt from Revenue’s Employer’s Guide to PAYE. See section 10.1 on page 68

Weekly pay should be regarded as paid on the same weekday throughout the Year. For example, where the normal Pay day is on a Friday, but one pay day is changed to the previous Thursday, the following day (Friday) should still be regarded as the pay day for the purpose of determining the income Tax Week. Excerpt from Revenue’s Employer’s Guide to PAYE. See section 10.1 on page 68

Choose the income Tax week in which the initial payment will be made. This will be the actual day of payment and NOT when the work was carried out. Refer to Revenue Tax Weeks and Months or the earlier Breakdown of Pay Dates Table.

How to start your first Pay Period
When you run your first Payroll in the Software, you will be shown the “First Pay Period” Wizard where you will be able to specify the starting Week number, the first Payment Date and the Period Ending Date
In Collsoft Payroll, select the first normal pay day (as it would usually be) for the first payment in the payroll Year. This must be the actual day of payment and NOT when the work was carried out.


CollSoft Payroll will automatically align the day and Tax week entered to appropriate income tax week based on the above weekday and date entered.




How to start your payroll with a Week 2 payment date



When you run your first Payroll in the Software, you will be shown the “First Pay Period” Wizard where you will be able to specify the starting Week number, the first Payment Date, and the Period Ending Date.
To use a Week 2 Payment date as your first date in the new Tax Year, please do the following:

1. Select the Day of the week that your employees are paid- in this example, we are using Friday.
2. Change the starting Week Number to 2- you will be warned about skipping Week 1, but you can ignore this message in this instance.
3. The payment date will be automatically set to the second Friday of the year- in this example, it is the 11th January 2024.
4. Change the Period Ending date to reflect the period that you are paying the wages for. This date will determine how these payroll runs are reported in the various management reports within Payroll



In terms of PRSI, as the employee will not be paid in Week 1, one of the following options should be used to correctly record the insurable weeks for PRSI purposes:

1. The employer can submit a “NIL” pay value payroll submission in Week 1, showing 1 insurable Week
2. The employer can report 2 insurable weeks (PRSI) on the payroll submission for the Week 2 pay date.


We would recommend that you take the second option and allocate 2 insurable weeks for your wages run in Week 2. Each payroll entry can be edited and the “insurable weeks” increased from 1 to 2 as shown below: