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Divide the payment between pay periods

Divide the lump sum payment across the pay periods it relates to reflect the employee's regular hours of work.

Calculate PAYE on the holiday pay

Calculate the PAYE on the holiday pay for each pay period.

Add the PAYE for all pay periods to find the PAYE amount to withhold from the holiday pay lump sum payment.

5 MINS
Deductions from salary or wages

Employers and employees can work out how much PAYE should be withheld from wages.

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Calculate PAYE on the total paid

If the employee received salary or wages as well as holiday pay during a pay period, add these together for each pay period. Calculate the PAYE due on the total amount they were paid in each pay period.

To find the PAYE amount to withhold from the employee’s salary or wages, deduct the PAYE withheld from the holiday pay in each pay period from the PAYE due on the total amount paid in that pay period.