Wages paid together with holiday pay - question

MadziulO

Hi everyone,

I have a question about payroll - I do not know anything about it.
I have checked my wages and I have noticed that my employer paid me my holiday pay (one week) together with one week wage. I know that it is possible to do but I have counted it and looks like they counted it like if I worked 9 days that week - so they multiplied 9 by an amonut of hours I worked per day, then counted tax and NIC and done. I looked on HM revenue website - http://www.hmrc.gov.uk/paye/payroll/special-pay/holiday.htm and they say that NIC should be counted in a different way if employer want to pay holiday pay in advance together with the wage. Is it a truth? If they paid me my holiday pay and normal weekly wage seperately then I would have almost £50.00 more!!!!!! (it is a big difference because my weekly wage is small - less than £190.00).

I will be grateful for any help.

Monsoon

Can you link to the HMRC website page that says that please?

MadziulO

http://www.hmrc.gov.uk/paye/payroll/special-pay/holiday.htm

As I said I don't know anything about payroll so I might be wrong.

payrollpro

The rules for advanced holiday pay are very simple, if two payments are made together in week 28 and one of the payments is for week 29 (holiday pay) then all of the tax rules are based on week 29 and not week 28. The employer is permitted to advance the tax period by the appropriate number of weeks in order to ensure the income is correct. Similarly with NIC social security rules dictate that each week is separate and must be treated for NIC as though they had been paid in the correct week.

To do otherwise is contrary to the Taxes Management Act 1970 which dictates that employers must obey the current tax rules. If what you say is correct, that the two weeks wages appear to have been treated as though they are one weeks wages then you have definitely overpaid NIC and possibly income tax. The tax probably wont be a problem as it is automatically adjusted the next time you are paid but NIC needs a manual adjustment.

What you do about is the next question. I would start by asking your employer if it is right because you understand something different and see what happens but ultimately you may have to ask HMRC to intervene - it really depends on how good the relationship is with your employer.

Perhaps point them in our direction, we can point out the problem and try and steer the whole process in the right direction.

Payrollpro

MadziulO

Thank you very much for your help. It was very very usefull