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HMRC internal manual

National Insurance Manual

Earnings Periods: Holiday pay paid in advance: employee stays at work & takes holiday later

If a weekly paid employee does not take their holiday until some time after gettingpaid for it eg a member of the maintenance staff who gets their holiday pay before thefirm’s annual close-down period but they remain at work and are expected to taketheir holiday later, the employee calculates the NICs on the pay at the time it is paid.

‘Regular Interval’ Rule (Method A) Used

If the employer used these rules, NICs are due on each week’s pay separately iefor the holiday pay and the normal weekly pay.

‘Holiday Earnings Period’ Rules (Method B) Used

If the employer used these rules then, for example:

  • a three weekly NIC is due on three weeks pay received before a fortnight’s general closedown; and
  • separate weekly NICs are due on the earnings during the closedown.