Making an Advance Payment in 2020 for 2021
Where an employee's pay will straddle two tax years
Please note credits and rate bands cannot be given in advance when an employee's pay straddles two tax years.
An employee is normally paid on a Friday but will receive two weeks' pay on 24th December in respect of 25th December 2020 and 1st January 2021.
In this instance, the following will apply:
- the payment date must be reported as 24th December using the credits and rate bands for week 52 only
- the employee will subsequently not be paid in week one of 2021
- the employee will then get the benefit of two weeks' credits and rate bands in week 2 of 2021
- It is not appropriate to use week 53 in this scenario unless the pay date falls on either the 30th or 31st December 2020.
- Incorrect use of week 53 will cause underpayments for employee
Where a Credit Transfer Payment will fall on 1st January 2021
Where your employees' normal pay date is due to be 1st January 2021 and payment is due to be paid by credit transfer, Revenue will accept the pay date to be reported as the 1st January 2021 where funds are made available to employees on the previous day only i.e. the 31st December 2020.
- An employee’s normal pay date is due to be 1st January 20201 – payment cannot be made on the 1st as it is a bank holiday
- Instead, payment will be made on 31st December 2020 (the previous day)
- In this instance, the pay date can be reported as 1st January 2021
- The employee's credits and rate bands will be applied for 1st January 2021 even though payment was paid in the prior year