Workers who are paid weekly could face a 2023/2024 tax liability

Those paid on a Friday may face an additional tax demand in the future due to the PAYE regulations

Workers who are paid on a weekly basis may face a tax liability when the Revenue reviews their tax position after the 5th of April 2024.

Robert Salter, Global Mobility Director, said:

The PAYE regulations are such that an individual’s personal tax allowance of £12,570 is typically utilised over a period of 52 weeks, where employees / workers are paid weekly. However, where the quirks of the calendar mean that there is a 53rd pay week in a tax year, such as in 2023/24 for those paid on a Friday – HMRC’s guidelines would still typically allow the employer to include an ‘extra personal tax allowance’ through the payroll when it comes to calculating the individual employee’s PAYE for that pay period.

The extra personal tax allowance is purely for payroll purposes and will be ‘removed’ when HMRC reviews someone’s overall tax position at the end of the year. As such, individuals in this situation would typically have an adjustment to their subsequent year’s tax code or receive a P800 tax demand to recover the ‘excess tax relief’ that they have received because of the 53rd pay period issue.

In practice, there is little that a taxpayer can do directly in this situation – it is simply a product of how the PAYE regulations work in practice. Therefore, the key issue is for taxpayers to be prepared for any additional taxes which they might have to pay.

The tax due because of the 53rd pay date issue will depend upon the taxpayer’s income level and whether there is a 53rd payment date in the 2023/24 tax year or not. Someone who is paid on a Monday, Tuesday or Wednesday each week should not be impacted by this issue – as there aren’t 53 Mondays, Tuesdays or Wednesdays in the 2023/24 tax year.

In addition, those whose annual earnings are always below the personal tax allowance threshold of £12,570 – e.g. because they only work a limited number of hours each week – should not have any problems, as no additional PAYE should be due. However, for those who are liable to PAYE each week, the additional tax can be quite considerable. A 20% taxpayer might need to find almost £50 to pay back to HMRC, whilst, for a 40% taxpayer, the amount could be around £96.

Would you like to know more?

If you have any questions about the above or would like to discuss your specific circumstance, please get in touch with your usual Blick Rothenberg contact or Robert Salter using the form below.