Week 53

Week 53 payments can occur when you're paid between week 52 and the start of the new tax year. Please see below information about payments which fall into week 53

Tax free allowance

In each financial year you are entitled to a tax code, the code entitles you to an annual tax-free allowance. If you are paid on a weekly frequency then the allowance is split into 52 equal weeks or ‘allowances’

For example, if you are on the standard 1257L tax code, then your annual allowance is £12,570 which is split into 52 equal allowances of approx. £241 per week. This means that £241 of your taxable pay is exempt from Income Tax deductions in each tax week.

Week 53 – what happens when I'm paid in week 53?

To protect your pay and to minimise the amount of Income Tax that is potentially underpaid or overpaid, HMRC put special rules in place. In this extra tax week HMRC instruct employers such as NASA Umbrella to process your pay on a ‘week1 tax code’.

A week1 tax code instructs the payroll system to process your pay based on those weekly earnings alone and doesn’t take into account your earnings to date in the financial year. This means that you are provided with a potential extra week of tax-free allowance. This can often result in owing Income Tax to HMRC.

The alternative is that even though your earnings are not high enough to pay Income Tax, in week 53 you may pay tax, since your previous earnings are not taken into account.

If you are paid in week 53 and if Income Tax is owed/overpaid then HMRC will be in touch to confirm this (usually via a letter once the financial year has ended and been accounted for on HMRC’s end). More often than not, HMRC tend to amend your tax code for the next financial year to account for the difference in Income Tax to spread the cost/refund across the year.