On review of an employee’s income tax liability, expanded tax credits and rate bands for Week 53 will be granted as set out below.
The following tax credits will, as appropriate, be increased by 1/52 –
– the Basic Personal Tax Credit,
– the Additional Tax Credit for Certain Widowed Persons,
– the Single Person Child Carer Credit,
– the Widowed Parent Tax Credit,
– the Age Tax Credit,
– the Incapacitated Child Tax Credit,
– the Dependent Relative Tax Credit,
– the Home Carer Tax Credit,
– the Blind Person’s Tax Credit,
– Medical Insurance,
– the Employee Tax Credit,
– the Earned Income Tax Credit,
– the Seafarer Allowance, and
– the Fisher Tax Credit.
In addition, any relevant flat-rate expenses (see Chapter 4.1 of Tax and Duty
Manual Part 42-04-35A – the Employer’s Guide to PAYE) will be increased by
Limits on increase in tax credits
Where the sum of the tax credits regrossed at the standard rate of tax, together with any deductions, exceed the amount of emoluments paid in Week 53, the benefit arising is limited to the actual amount of emoluments paid in Week 53.
Example 1 – Single Person with One Employment
Kevin received emoluments in Week 53 of €300 and was entitled to (i) the basic personal tax credit and (ii) the employee tax credit.
Basic tax credit – €1,650/52 = €31.73
Employee tax credit – €1,650/52 = €31.73
Regrossed equivalent €317.30 (€63.46 X 100/20)
The maximum tax credits to be given to Kevin are €60.00 (emoluments of €300 x 20%).
Example 2 – Married Couples/Civil Partners
Where both spouses have Week 53 income in a tax year, the Week 53 income of
both spouses is taken into account.
Mary received emoluments in Week 53 of €500 and her husband Sean
received emoluments of €150. Their tax credits are as follows;
Married tax credit – €3,300/52 = €63.46
Employee tax credit – €1,650/52 =€31.73
Employee tax credit – €1,650/52 = €31.73
As the joint Week 53 income is €650, the maximum relief that may be granted is €130.00 (€650 x 20%).
However, as Sean’s income is €150, the maximum relief due in respect of his income is €30.00 (€150 x 20%).
Therefore, the entitlement is:
Married tax credit – €63.46
Employee tax credit (Mary) – €31.73
Employee tax credit (Sean) – €30.00
Example 3 – Single Person with More than One Employment
Where an individual has more than one source of Week 53 emoluments in a tax year, only one of those sources is considered for the purposes of granting the increased tax credits. The source that gives the greater benefit to the individual is used.
Pat has two jobs, and he received emoluments from both in Week 53. From job A, he received €300 and from job B he received €50.
He is entitled to the Basic Personal Tax Credit (€1,650/52 = €31.73) and the
Employee Tax Credit (€1,650/52 = €31.73).
As it is more beneficial for Pat to have his credits allocated to job A, the Week 53 relief is allowable against those emoluments. However, the maximum credits he receives are €60.00 as they are restricted to his emoluments from that source of income i.e. €300×20%.
In addition to tax credits, the appropriate standard rate band will also be increased by 1/52 in a Week 53 scenario. Where an individual has more than one source of Week 53 emoluments in the tax year, only one source may be used for the purposes of increasing the rate band.
Limits on increase in rate bands
The increase in the appropriate standard rate band cannot exceed the amount of the Week 53 emoluments.
Example 4 – Single Person with One Employment
John received emoluments in Week 53 of €300 and was entitled to the single person’s standard rate band.
Standard rate band €35,300/52 = €678.85
Emoluments received in Week 53 = €300.00
The maximum amount of increase in the rate band to be allowed to John in Week 53 is therefore €300.00 and not €678.85, as it is restricted to the amount of emoluments received in Week 53.
Example 5 – married couples/civil partners
In the case of married couples/civil partners, the appropriate standard rate band is –
a. where one spouse has Week 53 emoluments – €44,300 (2021 rate)
b. where both spouses have Week 53 emoluments – €70,600 (2021 rate)
The appropriate standard rate band is increased by 1/52, i.e. €852 (€44,300/52) or €1,358 (€70,600/52).
Where both spouses have Week 53 emoluments, the increase arising in respect of the increased rate band €26,300 (€70,600 – €44,300) is restricted to the amount of the Week 53 emoluments of the spouse with the lesser Week 53 emoluments.
Peter received emoluments in Week 53 of €1,000 and his spouse Paul received emoluments of €450. Their standard rate bands were allocated by them as follows:
Peter: Rate band – €44,300 Paul: Rate band – €26,300
Weekly cut off – €851.92 Weekly cut off – €505.77
Week 53 Pay – €1,000 Week 53 Pay – €450
The maximum amount of rate band that Peter can use in Week 53 is €851.92 as this is the most that is allowable to him. The maximum amount of rate band that Paul can use in Week 53 is €450.00 as it is restricted to the pay he received in Week 53.
As such, the expansion in the rate band is €1,301.92 (€851.92 + €450).
Cases where increased credits and rate bands are not due
If an employer changes a payday during the year, or the previous year, resulting in a ‘Week 53’ payday, no additional tax credits or rate band are due. This also applies where a payment, including a notional payment, is made to an employee on 31 December (or 30/31 December in a leap year) and it is not the employees’ normal payday.
Under PAYE Modernisation (effective from 1 January 2019), an employer should submit a payroll submission to Revenue every time a payment of emoluments is made setting out pay and tax details for each employee. Employers are required to specify the pay frequency on the payroll submissions including the number of expected pay days in the tax year.