Mark Jones, Director, Broomfield & Alexander
Because 2012 is a leap year, week 53 includes two days this year – Wednesday 4 and Thursday 5 April.
You’ll only have a week 53 if you’re due to process any weekly, two-weekly or four-weekly paid employees on either of these days.
Will I have a week 53?
In the 2011/2012 tax year, you will have a week 53 if the following applies:
Normal pay day is a Wednesday or Thursday and…
- Weekly paid employees are last processed on Wednesday 28 or Thursday 29 March 2012.
- Fortnightly paid employees are last processed on Wednesday 21 or Thursday 22 March 2012.
- Four weekly paid employees are last processed on Wednesday 7 or Thursday 8 March 2012.
In each of these instances, the employees are due to be processed next on 4 or 5 April 2012, week 53.
Note: If your normal processing date falls on Wednesday 4 or Thursday 5 April 2012, but you intend to process your payroll earlier, you must still set the date to the correct date.
These are the only scenarios where a week 53 should be processed, as the next processing date for all other pay dates falls into the 2012/13 tax year. Monthly employees do not have a week 53.
Tip: There is nothing different that you need to do to process week 53. Simply set your processing date to the correct date and follow your normal processing routine.
You must ensure that the payroll for week 53 is updated, just like any other pay period, before beginning the year end process.
Note: If you don’t have a week 53, once you’ve processed and updated your final pay period, you can start your year end routine.
How tax and national insurance (NI) is calculated in week 53
Tax
To comply with government legislation, Sage 50 Payroll correctly calculates tax in week 53 using a week 1 / month 1 free pay allowance. Any previous pay and tax is ignored. This means that tax is calculated on the gross pay for tax this period only, using a weekly pay adjustment at the current tax code. If the employee is paid fortnightly or four weekly, the two or four weekly pay adjustment is applied.
Note: If the employee’s total pay for the year, including the pay for week 53, is less than their free pay allowance, then no tax is deducted in week 53. For example, a weekly employee on tax code 747L has an annual free pay allowance of £7479.12. They have been paid £5000 up to and including week 52, then is paid £500 in week 53. As £5500 is less than their free pay allowance, no tax is deducted.
NI
For employees, NI is calculated as in any other pay period, using the weekly, two weekly or four weekly thresholds, as appropriate.
For directors using the table method, their NI is recalculated in week 52 using the annual thresholds. The NI for week 53 is then calculated cumulatively on a year to date basis. For directors using the year to date method, their NI for week 53 is calculated cumulatively as in any other pay period.
How does week 53 appear on reports?
P11 Deduction Cards (PAYE and NIC)
Payments processed on 5 April appear as a separate line on the P11 with 53 in the Wk/Mth No column.
Note: Total pay to date (column 3), Total free pay to date (column 4) and Total tax due to date (column 6) show the amounts for week 53 only, not cumulative values.
P14/60
Forms P14/60 have a Week 53 payment indicator box. This box is only populated if a payment has been updated on 4 or 5 April. This indicates that an extra tax calculation has been performed in this tax year and shows one of the following values:
- Weekly paid employees – 53
- Fortnightly paid employees – 54
- Four weekly paid employees – 56
Note: This payment is referred to as week 53, however fortnightly or four weekly paid employees have tax deducted using the two or four weekly pay adjustment. The week 53 payment indicator box reflects this by showing week 54 or 56 for these payment frequencies.
The tax period shows week 53, but I don’t have a week 53
One of the first steps of the year end process is to change the process date to 5 April. This is the date that should be used for all year end reports as it is the last day of the current tax year.
After changing the date the tax period displayed on the status bar shows tax week 53. This does not mean that you have to update week 53. You only need to process week 53 if your employees are weekly, fortnightly or four weekly paid and your normal processing date is 4 or 5 April 2012.
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