HMRC has issued clarification for employers on how to deal with 'week 53' salary payments made to employees.

There are 52 weeks in any one year, plus one extra day, or two extra days in a leap year. Employers that pay their employees weekly, fortnightly or four-weekly, instead of monthly, may end up making an extra payment to their employees at the end of the tax year, which ends on the 5 April. These extra payments are called 'week 53' payments.

HMRC considers 'week 53' payments as a non-cumulative payment (also known as 'week 1') to be treated in isolation and tax is deducted without taking into account previous pay and tax details.

Employers are advised to use a non-cumulative tax code in all cases. As these payments may result in an underpayment of tax for employees due to the extra Personal Allowance (tax free pay) provided to protect the level of take home pay they receive in that pay period, HMRC suggests that employers advise their employees of the potential position if a 'week 53' payment is made.

When completing a Full Payment Submission (FPS) for 'week 53' payments, employers are advised to enter tax week numbers 53, 54 and 56 if there are 53 weekly, 27 fortnightly and 14 four-weekly payments in a year respectively. They are not to change the final tax code to week 1 if the only reason they have used week 1 is to calculate a payment on week 53.

More details are available from HMRC