Extra Pay Period (Week 53, Fortnight 27 or four-weekly period 14)
You may have an extra pay period when processing towards the end of the tax year.
An extra pay period occurs when the regular pay date for weekly, fortnightly or four-weekly paid employees falls on either Wednesday 30 December or Thursday 31 December. As 2020 is a leap year, there are two pay days that may result in an extra pay period.
Will I have an extra pay period?
In the 2020 tax year, you have an extra pay period if the following applies:
Your normal pay day is a Wednesday or Thursday, and your…
- Weekly paid employees were last processed on 23 or 24 December.
- Fortnightly paid employees were last processed on 16 or 17 December.
- Four weekly paid employees were last processed on 2 or 3 December.
- Monthly frequency payrolls can not have an extra pay period.
In each of these instances, you’re next due to process the employees pay on 30 or 31 December 2021. These are the only scenarios where you must process an extra pay period, as the next processing date for all other pay dates falls in to the 2021 tax year.
If you don’t have an extra pay period
Once you complete your final pay period, you can process payroll year end.
If you have an extra pay period
To process an extra pay period, there’s nothing different that you need to do. Simply set the period and follow your normal processing routine. Sage Payroll will automatically apply the correct rules to each employee being processed in the extra pay period.
CAUTION: All employee payments that are processed in Sage Payroll 2020 must be paid to employees before 31 December 2020, regardless of when the employee last received pay. If an employee is due to receive pay in January 2021, this must be processed in Sage Payroll 2021.
Once you’ve done this, you can process payroll year end.
How tax and universal social charge (USC) calculates in an extra pay period
To comply with government legislation, tax and USC calculates on a week 1 basis. This means that for this period only, tax and USC is calculated on your employees’ gross pay, using a weekly pay adjustment at the current tax code and USC rates.
If an employee is paid fortnightly or four weekly, the two or four weekly pay adjustment applies.
CAUTION: Whilst many employees may already be on week 1 tax status where your company availed of the Temporary Wage Subsidy Scheme, you must process the extra pay period separately to your penultimate pay period.
Set an extra pay period
1. Open Sage Payroll 2020 and log in to a payroll as normal.
2. Do one of the following:
- From the menu bar at the top of your window, click Processing then click Set Period.
- From the process map in the centre of Sage Payroll, click Set Period.
3. In the New period to process box, enter the extra pay period number:
- In a weekly payroll – Type 53.
- In a fortnightly payroll – Type 27.
- In a four weekly payroll – Type 14.
4. Check the dates and information are correct for the last period of the tax year. If not, amend as required.
5. Once all information is correct for the new period, click OK.