Alison Clynes
Written by Alison Clynes
Friday, 11 December 2009 10:00

Anybody who has ever dabbled in the world of payroll services probably thinks that the treatment of holiday pay is fairly straightforward. However, there are lots of specific points that need to be kept in mind when dealing with payroll services.

One area which is best avoided if you don't want to think too hard about payroll services is the construction industry. There are special schemes operated in the building industry where employees run their own self-managed holiday funds.

Some employees put aside monies from their pay throughout the year so that they can receive them at Christmas or for their annual holidays. This is more common in areas of the country where there is a traditional holiday fortnight. The simple rule here is that tax and NIC should be paid at the same time the money is put aside. In other words H M Revenue and Customs don't mind what you do as long as they get their share at the earliest opportunity.

The basic rule for holiday pay is that it should be recorded, and tax and National Insurance Contributions should be deducted according to the tax tables for that week. However if somebody will not be paid the actual week they are on holiday then the calculations should be carried out as if everything was paid in the week they are away.

If you find the whole question of holiday pay a little too taxing (excuse the pun), it is probably best to use a payroll services company such as ourselves at Dataplan Payroll as a payroll solution.

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