Accounting for allowances and benefits for staff: Holiday pay

Taxing holiday pay

Definition

Holiday pay is both pay for an employee's annual leave and pay for statutory holidays.

How to tax holiday pay

Holiday pay and pay for statutory holidays are included as earnings in the period that you actually pay them to your employees.

To determine the tax on your employees' holiday pay, you can use our online holiday pay tax calculator available under Work it out >

From 1 April 2011, employers and employees can agree to cash in a maximum of one week of annual holidays. If an employee has "cashed in" any annual leave this is treated as an extra pay.

Find out more

• Go to the Department of Labour's website for more information about holiday pay.
  
  
• Check your obligations under the Holidays Act 2003. You can find this Act under Related websites >

Date published: 18 Apr 2011

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