Week 53 in 2021

Introduction

In 2021 any wages paid on Friday 31st December for Weekly, Fortnightly or Four-Weekly payrolls are eligible to be processed as a "Week 53" payroll.

In a "Week 53" payroll employees are allocated one extra week of tax credits and PAYE/USC bands. All calculations are carried out on a "Week 1" basis. Essentially the employees are getting the benefit of 53 weeks or their tax credits which reduces their overall tax bill for the year.

However, there are some rules that you should be aware of;

Week 53 cannot be paid in advance

Week 53 only applies if you are actually paying your employees on Friday 31st December. You cannot for example pay two weeks pay in Week 52 (Friday 24th December) and use the Week 53 credits.

If you pay an additional week of holiday pay in Week 52 in CollSoft Payroll then the calculations will only allocate 52 weeks of credits, not 53 as you might expect. This is to ensure that the calculations in the software match the correct Revenue calculations.

When Revenue prepare an employee's end of year "Statement Of Liability" they do not use the number of insurable weeks to determine if a Week 53 credit applies. So, even if the employee has 53 insurable weeks filed with Revenue, they will still only allocate 52 weeks of credits in their calculations.

Revenue will only allocate a "Week 53" credit to an employee if that employee has a filed payslip with a payment date of 31st December 2021

Some employers will be tempted to process a Payroll for the 31st December, file it with Revenue, but then go ahead an pay the employee on 24th December - We strongly advise employers not to attempt this as they may be liable to sanction from Revenue if it is discovered.


Week 53 only applies in 2021 if Friday is your normal pay day

Employers are only entitled to use a Week 53 in 2021 if their normal pay day is Friday, and they are making a payment on Friday 31st.

If your normal pay day is any other day of the week then you are not entitled to use a Week 53, even if you go ahead and make a payment on Friday 31st December.

If your normal Pay Day is on a Monday, Tuesday, Wednesday, Thursday, Saturday or Sunday then you are not entitled to use Week 53 credits in 2021.


What if I still need to process wages on 31st December but I don't qualify for Week 53?

There may be some circumstances where an employer will still need to process wages on Friday 31st of December even though they do not qualify for a Week 53.

In CollSoft Payroll you can choose to run a Week 53, but not to allocate any additional credits to the employee's PAYE and USC calculations by unticking the box labelled "Apply Week 53 Credits and Cut Off Points to this wage" on the wage entry screen (shown below)




Week 53 in 2020

Introduction


Because 2020 is a Leap Year any wages that are normally due to be paid on either Wednesday 30th or Thursday 31st December are allowed to be processed using a Week 53. This is subject to the condition that the employer has not changed his normal payment day to be a Wednesday or Thursday in 2020 or 2019.

Processing wages on a Week 53 basis essentially allows employees the benefit of an extra week of Tax Credits and Cut Off Points in the calculations for PAYE and USC.

Revenue will be closely monitoring the use of Week 53 this year end and they will be specifically looking for instances where employers apply a Week 53 when they are not entitled to do so.

If your normal Pay Day is on a Monday, Tuesday or Friday then you are not entitled to use a Week 53


What do I do if I normally pay on a Friday?

Employers who normally pay on a Friday may be confused about how they should process their wages over the Christmas Holidays in as both Friday 25th December (Christmas day) and Friday 1st January 2021 are bank holidays, and as such payments to their employees cannot be made on those days.

Under PAYE Modernisation there is an exception to the reporting rules in situations where your normal pay day happens to fall on a bank holiday.

In these circumstances the employer still reports the normal payment date to Revenue, but they are allowed to make the payment to the employee on the previous banking day.

So, for an employer who is due to pay wages on Friday 25th December 2020, the employer should continue to process the payroll using a payment date of 25th December and report this to Revenue, but they are allowed to actually make the payment to the employees on Thursday 24th December. Remember - Report as 25th, pay on the 24th.

Likewise, this employer would also normally be due to pay the next weeks wages on Friday 1st January. In this case the employer must calculate and report the payroll using our 2021 software with a payment date of 1st January, but they are allowed to actually pay their employees on Thursday 31st January.

Important: If you are due to pay wages on 1st January you must run this in our 2021 software - DO NOT process it in our 2020 software with a payment date of 31st December as this will result in a Week 53 calculation which would be incorrect.


What if I still need to process wages on either 30th or 31st December but I don't qualify for Week 53?

There may be some circumstances where an employer will still need to process wages on Wednesday 30th or Thursday 31st of December even though they do not qualify for a Week 53.

In CollSoft Payroll you can choose to run a Week 53, but not to allocate any additional credits to the employee's PAYE and USC calculations by unticking the box labelled "Apply Week 53 Credits and Cut Off Points to this wage" on the wage entry screen (shown below)