Four weekly paid

apcorbett

I am currently four weekly paid, which has its advantages, as you get 13 pay days a year, and therefore once a year each of the monthly bills are free. So, if it's the mortgage or the credit card, then bingo.

However, next year we are going to have 14 pay days in the tax year, as we get paid on April 6th 2011, then April 4th 2012.

This will have impacts on many people pushing them in to the higher rate tax bracket.

Is there anything that can be done, apart from putting the whole amount in to a pension, to avoid this happening?

Gertie_Walker

Why will it push people into 40% tax? Your annual salary will remain the same, surely?

apcorbett

Gertie_Walker wrote: »

Why will it push people into 40% tax? Your annual salary will remain the same, surely?

It does, but the taxable income for 2011/12 will include 14 pay days, so 14 x the four weekly sum, which will push people in to 40% tax.

getmore4less

Ask the company to move the pay day.

chrisbur

apcorbett wrote: »

I am currently four weekly paid, which has its advantages, as you get 13 pay days a year, and therefore once a year each of the monthly bills are free. So, if it's the mortgage or the credit card, then bingo.

However, next year we are going to have 14 pay days in the tax year, as we get paid on April 6th 2011, then April 4th 2012.

This will have impacts on many people pushing them in to the higher rate tax bracket.

Is there anything that can be done, apart from putting the whole amount in to a pension, to avoid this happening?

This occurs because the weekly time scale does not fit exactly into the year 365/7 = 52.14 and a bit. Plus in a leap year you get another day. To account for this when you get a pay day that falls on April 5 or in a leap year on April 4 or 5 you have what is known as a week 53 for weekly paid week 54 for two-weekly paid or week 56 for four weekly paid.
When your wage is worked out it will be treated as a stand alone wage as if you were on an emergency tax. So you will get an exctra tax allowance ( ie your annual allowance divided by thirteen ) and tax will be worked out on this without referance to you pay and tax for the previous thirteen payments. The result will be that your tax paid will be the same as tax you would normally pay on this amount. So if you are not paying 40% tax normally you will not pay it on this week 56 payment, assuming similar earniongs for the period. Anyone with low earnings so far in the year who would not have paid tax anyway but for it being week 56 will not pay any tax in week 56.

The following was the case a few years back and as far as I know it still applies.
There is one small problem and that is if you are self asessed then the tax office work on annual figures and your tax will be calculated as if you had not had a week 53 54 or 56, then you will owe tax on the extra tax allowance given and possibly 40% tax if it applies.

chrisbur

getmore4less wrote: »

Ask the company to move the pay day.

Unfortuneately that will not work, you just move the extra payday into the next year. The week 56 has to be there occasionally to fit the extra days into the tax year.

apcorbett

chrisbur wrote: »

The following was the case a few years back and as far as I know it still applies.
There is one small problem and that is if you are self asessed then the tax office work on annual figures and your tax will be calculated as if you had not had a week 53 54 or 56, then you will owe tax on the extra tax allowance given and possibly 40% tax if it applies.

And it was sounding so good, except I do have to do a self-assessment!

The problem is more that from 2013 the good old government is stopping child benefit for higher rate tax payers, and I will be in that boat solely because of the four-weekly pay.

Will they accept that the next year, my pay will not be as much, and therefore I will be a standard tax payer?

zygurat789

Look on the bright side.
Since you will presumeably never gat less than gross pay/52 times 4 each pay day and if you are paid 52.14 and a bit times per year then you are being paid more than your actual gross pay.
Sile and pay the tax.

apcorbett

zygurat789 wrote: »

Look on the bright side.
Since you will presumeably never gat less than gross pay/52 times 4 each pay day and if you are paid 52.14 and a bit times per year then you are being paid more than your actual gross pay.
Sile and pay the tax.

Actually, no, that isn't right.

I don't get my annual gross divided by 13!