NIM09120 - Earnings Periods: Holiday pay paid in advance or in arrears: 'Regular interval' rule (or Method A)

Regulation 2 of the Social Security (Contributions) Regulations 2001 (SSCR 2001) (SI 2001 No 1004)

Employers can pay holiday pay either in advance or in arrears.

When holiday pay is paid the employer may apply the “regular interval” rule (or “Method A”) so that they treat each week’s pay as paid at the normal time and calculate NICs separately on each week’s pay using the normal weekly earnings period.

However, if the normal payday is in a different tax year, the payment cannot be treated as paid at the regular interval and the employer must calculate the NICs using the rates current at the time of payment. The employer must not add the payment to any other payment due in that tax year.