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Implications of changing from weekly pay

Change from weekly to fortnightly wages

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Could you please advise as I seem to be up against a wall. Company has decided to pay weekly staff fortnightly. I advised that it would be easier to start in the new tax year. They want to start from this week ie the last week of the tax year thereby paying one week from 18/19 and one week 19/20 as there is no payroll this week. Surely this would have an impact on their wages as being paid 2 weeks in the 1st week of a new tax year would increase NI, Tax and pension deductions

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02nd Apr 2019 11:48

In a fortnightly payroll, the tax year is split into 26 2-week earnings periods.

A payment made at any point during an earnings period is taxed to the week the period ends. So any payment made between the 6th and the 19th of April is taxed to week 2, those made between the 20th of April and the 3rd of May are taxed to week 4 and so on. The NI treatment is similar, using 2-weekly thresholds.

Therefore there shouldn't be extra tax and NI to pay . It's when the money is paid that matters, not when it's earned, so the fact that the first fortnightly payment contains money for work done partly in one tax year and partly in the other doesn't matter.

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By GW
02nd Apr 2019 12:28

I agree with Neil, going on to fortinghtly pay won't increase the total tax NI and pension due.
It may be worth considering when you start on fortnightly pay as it will determine which tax month the payment comes in and therefore how much is due to HMRC in each tax month - how does this relate to the company's cashflow. This will depend on how large the weekly payroll is relative to the size of the business.
The other consideration is how are the employees going to cope with the change - not getting paid this week and receiving double next week could cause issues.

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