Why would I need to align my pay periods with the tax year?

You may need to align your scheme to tax periods if you’re using a payroll software such as Sage that’s set up in this way. You may also want to use tax periods if your organisation’s payroll is calculated on a tax monthly or tax weekly basis.

In task five of your Nest set up ‘When and what you’ll pay’, you’ll be asked how often you pay your workers. You can align your pay periods with the tax year by selecting a tax weekly or a tax monthly frequency.

For example, if you’re setting up tax monthly contributions you should set the payment frequency to ‘Tax Monthly’. We’ll select the period to begin on the sixth day of the month because the tax year begins on 6 April. If you’re setting up a tax weekly pay period you should set the payment frequency to ‘Tax Weekly’. If you’re setting up fortnightly or four-weekly pay periods you’ll have to select the pay period from Saturday to Friday, because 6 April 2024 was a Saturday. If you set them to begin on Saturday then they’ll be aligned with the current tax year.

You can set up a group by selecting ‘Tax Weekly’ or ‘Tax Monthly’ based on how often you pay your workers to meet the requirements of your payroll provider. Your payroll provider can send contribution information to Nest based on the tax period. Please see How do I align my pay periods to the tax week? or How do I align my pay periods to the tax month? for more information.

If you choose ‘Tax Weekly’, in the last week of the tax year you’ll need to pay contribution for just one day. If it’s a leap year you’ll need to pay contributions for two days.