RD 17Payment of extra pay with other PAYE income payments

1. This section applies when a person pays an amount of extra pay to an employee who also receives a PAYE income payment from the person, regardless of whether the extra pay is paid with or separately from a PAYE income payment. The amount of tax for the extra pay is based on the sum of—

2. the amount of the extra pay; and
3. the annualised value of all PAYE income payments made to the employee in the period that starts 4 weeks before the date of the payment of the extra pay and ends on the date of that payment.

4. Despite subsection (1), if the extra pay includes an amount that arises from the ending of the employee’s employment, the amount of tax for the extra pay is based on the sum of—

5. the amount of the extra pay; and
6. the annualised value of the PAYE income payments for the last 2 pay periods before the PAYE income payment for the extra pay.

7. For the purposes of calculating the amount that is the annualised value referred to in subsection (1)(b), the amount of the extra pay referred to in subsection (1)(a) and of extra pays paid to the employee in the period referred to in subsection (1)(b) is excluded.

8. This section does not apply to—

9. a non-resident seasonal worker—
   1. who has notified their employer of their tax code, for which see section RD 10(2C):
   2. to whom schedule 5, part B, clause 3 of the Tax Administration Act 1994 applies:
10. an employee who has a non-notified tax code referred to in schedule 2, part A, clause 3.

11. For the sum of the amounts referred to in subsection (1) listed in the following paragraphs, the amount of tax for the extra pay that must be withheld is the amount determined using the basic amounts of tax for PAYE income payments set out in the relevant row of schedule 2, part B, table 1 (Basic tax rates for PAYE income payments):

12. if the sum of the amounts is $15,600 or less, the amount determined by applying row 2:
13. if the sum of the amounts is more than $15,600 but not more than $53,500, the amount determined by applying row 3:
14. if the sum of the amounts is more than $53,500 but not more than $78,100, the amount determined by applying row 4:
15. if the sum of the amounts is more than $78,100 but not more than $180,000, the amount determined by applying row 5:
16. if the sum of the amounts is more than $180,000, the amount determined by applying row 6.

17. Despite subsection (2), if the person pays an amount of extra pay to an employee in relation to which the employee has notified the person that a secondary code under schedule 5, part A, clause 4, rows 3 to 6B of the Tax Administration Act 1994 applies, the rate under schedule 2, part B, table 1 applying to the extra pay is determined using the formula—

    $extra\; pay\; +\; annualised\; amount\; +\; low\; threshold\; amount.$

    Where:

18. In the formula,—

19. extra pay is the amount of the employee's extra pay:
20. annualised amount is the amount given by subsections (1)(b) and (1B):
21. low threshold amount is, as applicable,—
    1. for secondary code SB, $0:
    2. for secondary code S, $15,601:
    3. for secondary code SH, $53,501:
    4. for secondary code ST, $78,101:
    5. for secondary code SA, $180,001.