If you happen to be affected, the issue can be rectified pretty easily.
Leading tax refund experts Taxback.com have reported that a variety of workers will be affected by a tax issue known as ‘Week 53’ in 2017.
PAYE workers who are paid weekly, fortnightly or every four weeks on a Thursday are being urged by Taxback.com to check whether the issue affects them and to check if they have overpaid in tax as a result.
Explaining how ‘Week 53’ works and how it might affect your pay packet, Barry Flanagan, Senior Tax Manager at Taxback.com, said: “Employers are due a ‘week 53’ if there are 53 pay dates in the calendar year. Revenue always divides weekly tax credits by 52, and never adjusts for leap years. That’s 52 Mondays. 52 Tuesdays, 52 Wednesdays etc.
“As there are 7 days in a week, Revenue multiplies that by the number of weeks in the year to get a total of 364 taxable pay days. However, as we know, there are 365 days in a year, or 366 in a leap year. This leaves one spare pay date each year to which your current tax credit does not apply, meaning you are effectively paying tax of up to 40% on that extra day.
“For example, if in 2015 your first pay date fell on Thursday January 1 and your last pay date fell on Thursday December 31; that’s a 53-week year for employers with Thursday pay dates. Employers with any other pay date will not be due a week 53.
“And depending on the date you’re paid, the same logic could be applied to 2014, 2016, and 2018.
“The same principle applies for employers who run fortnightly payroll (they are only due a week 27 if there are 27 pay periods in the calendar year).”
Taxback.com have recommended several checks for workers to see if they are potentially affected.
- Firstly, establish if you are one of those potentially affected.
- Are you paid weekly, fortnightly or four weekly?
- If so, what day of the week are you paid on?
- Did that day of the week fall on December 31 (or December 30 if it’s a leap year)?
- If the answer to all the above is “yes”, then check your P60 and see if the box marked “Enter X if there were 53 pay days in 201X” is, in fact, marked.
- If it’s not – you may be in line for a tax refund.
Explaining how workers might go about remedying the issue if they are affected, Barry Flanagan continued: “Typically, payroll will correct for this and give you an extra week’s tax credits and tax bands, however this doesn’t always happen. It also affects USC deductions but employers should also correct for this. There is no change in the way PRSI is calculated.
“If isn’t sorted by payroll then you could be owed anything from €200, depending on how you get paid.
“Revenue gets their information from payroll, so if the adjustment was not made correctly, you could end up out of pocket! Revenue will not apply this if your payroll doesn’t, so it’s up to you to contact revenue directly to check the issue, or contact a tax agent like Taxback.com to make the amendment. They can also check what other reliefs you may be due in the last four years.
“This tax issue might appear convoluted initially but it’s really not the case, and people shouldn’t be put off understanding it. Once the issue is identified, it can be rectified pretty easily and ultimately will mean more money in worker’s pocket.”
For more information on Week 53, check out the Employer’s PAYE section on the Revenue website.
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