Revenue Note for Guidance

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Revenue Note for Guidance

480B Relief arising in special circumstances

Summary

This section provides for increased tax credits and rate band where a PAYE taxpayer is paid in a week 53 situation in a tax year.

Week 53 arises when a payday falls on the last day of a tax year, or the penultimate and last days of a leap year, and the individual has an extra payday in that year compared to a normal year.

A similar provision is in place for USC – [section 531AN(5), (6) and (7)].

This section applies for the year of assessment 2018 and subsequent years.

Details

(1) This section applies where emoluments are -

  • chargeable to income tax in accordance with Section 112(3) i.e. chargeable to tax under Schedule E on the basis of the income paid to the individual,
  • subject to PAYE (Chapter 4 of Part 42), and

paid on 31 December, or 30/31 December in a leap year.

(2) The deduction and tax credits specified in subsection (3) are to be increased by–

  • 1/52 where the individual is paid weekly, and
  • 1/26 where the individual is paid fortnightly.

(3) The tax credits that are to be increased in a Week 53 scenario are-

  • Section 461 – Basic Personal Tax Credit
  • Section 461A – Additional Tax Credit for Certain Widowed Persons
  • Section 462B – Single Person Child Carer Credit
  • Section 463 – Widowed Parent Tax Credit
  • Section 464 – Age Tax Credit
  • Section 465 – Incapacitated Child Tax Credit
  • Section 466 – Dependent Relative Tax Credit
  • Section 466A – Home Carer Tax Credit
  • Section 468 – Blind Person’s Tax Credit
  • Section 470 – Medical Insurance
  • Section 472 – Employee Tax Credit
  • Section 472AB – Earned Income Tax Credit
  • Section 472B – Seafarer Allowance
  • Section 472BA – Fisher Tax Credit

(4) This sub-section operates to limit the benefit under subsection (2) to the amount of emoluments paid on the relevant day (30/31 December). The amount of the increase is limited to the sum arrived at as follows:

  • The amount of any increased deduction (A) and
  • The taxable equivalent of any tax credit (B), i.e. the tax credit regrossed at the standard rate.

Where the amount of the emoluments paid in week 53 is less than the amount calculated above, the amount of the benefit under sub-section (2) is limited to an amount equal to the amount of the week 53 income.

(5) Where the individual is in receipt of both weekly and fortnightly emoluments in a week 53 pay day, (e.g. where the individual has emoluments from more than one employment and both have a week 53 pay day), the extent of the increase in subsection (2), or where appropriate subsection (4), is granted against the income arising from only one of the sources i.e. whichever is the most beneficial to the individual.

(6) An individual is also entitled to an increase in the relevant rate band.

(7) In the case of married couples or civil partners, where both spouses have Week 53 pay days, the amount of the additional rate band is also to be increased.

(8) The increase in the rate bands under subsections (6) and (7) are limited to the amount of the emoluments paid on the week 53 pay day.

(9) Where the individual and his/her spouse or civil partner are both in receipt of weekly and fortnightly emoluments in a week 53 pay day, (e.g. where an individual and his/her spouse or civil partner have emoluments from more than one source and each source has a week 53 pay day), the extent of the increase in subsection (6), (7) and (8), is granted against the income arising from only one of each of their sources i.e. whichever is the most beneficial to the individuals.

(10) Where an individual is entitled to marginal relief, the exemption provided for in Section 188 is also increased by 1/52 where the individual is paid weekly, or 1/26 where the individual is paid fortnightly. The increase is limited to the amount of emoluments paid in week 53.

(11) Where the individual is in receipt of both weekly and fortnightly emoluments in a week 53 pay day, (e.g. where an individual has emoluments from more than one source and both sources have a week 53 pay day), the extent of the increase in subsection (10), is granted against the emoluments arising from only one of the sources i.e. whichever is the most beneficial to the individual.

(12) There is an anti-avoidance provision to stop the manipulation of pay dates to cause unscheduled Week 53 years. Where the pay date of an employee has been changed in a year, or a preceding year, this section will not apply. Also, if the normal pay day of the individual is not on 31 December, or 30/31 December in a leap year, the section will not apply. (See section 531AN(7) for USC).

(13) For the purposes of subsection (12), the normal pay day is the day on which weekly or fortnightly pay is normally/usually paid to the individual.

Relevant Date: Finance Act 2019