Holiday Pay

Hannah132

I've been temping through an agency since September, thus accumulating quite a bit of holiday pay, just short of £800 I think.
I'm due to leave at the beginning of May and was wondering if there was a way I could get away with paying less tax/NI if I spread it out over a few weeks.
Hopefully tax won't be too big of an issue as it'll be the new tax year.

I'm not going to lie, I'm not the best understanding tax and NI and stuff so any help would be much appreciated.

CLAPTON

you will pay tax and NI on holiday pay just as if it were ordinary earnings; no more and no less

WestonDave

Tax is cumulative so you won't make a saving by spreading it out, although if you have no other earnings planned for next tax year it will help use your personal allowances. If you get paid this in May and then have no further earnings you may be due a tax refund at the end of the year.

NI is the reverse - its on a week or month basis - so assuming that you are already paying over the weekly/monthly limit, it will make no difference unless you either earn enough that £800 pushes you over the top limit (at which point you pay a lower rate of 2% rather than 12%) - OR you move the holiday pay into a week/month with no other earnings (e.g. they pay it in the next pay period after you've left) in which case you get some of it below the threshold. Arguably doing could be legitimate because its holiday pay, so they are paying you whilst you aren't working but whether they will do it is another matter!

Hannah132

Thanks I'm actually the administrator for the agency, so I can put my own holiday pay through.

Was just trying to figure out wether taking it all in one chunk, or spreading it out over say 4 weeks would be worth it.