how many weeks are there in a year everyone knows 52 and how many days in a week seven no
one's good they're wrong they're wrong that can't be right because 52 times 7 is 364 and no year has
364 days there are actually 52 and a tiny bit a little bit more changes a little bit but there's
more than 52 weeks in a year and because of this slight mismatch I have discovered what I think is
an undocumented a zero day exploit in the UK tax code if you're in the United Kingdom there's a
chance because of the number of weeks in a year that you are paying more tax than you should
or be it only in one or two particular situations and not that much money but
the point is you should be outraged so outraged you watch the rest of this video
or if you just want the conclusion you can skip ahead to 10 minutes and 20 seconds [Music] hello
and welcome to the first and potentially only ever annual stand-up maths tax video because it's the
tax season in the US your tax season whether tax year ends at the end of the calendar year here
in the UK we have until the end of January to get our tax returns done and paid so that's a
very recent memory and at the beginning of April is when our tax year takes over there's a lot of
going on at the moment so I thought I'd make a video to say many happy tax returns and we can
briefly celebrate the wonder that is doing your taxes obviously I'm all across my taxes I make
sure I got lots of money aside because you know self-employed I got to pay them all at once then
what do you mean we spent all the money on what money guns I don't remember money guns
oh oh yeah oh yeah the money guns what a poetic way it's uh so we need how much okay we'll uh well
I'll deal with that in a moment for this video we're gonna have a look at the slightly unusual
tax this is the UK ni contributions ni or National Insurance is an additional income tax here in the
UK it's also an employer tax which is put into a specific pot for very particular things the state
pension maternity cover job Seeker allowance they all come out of this National Insurance pot and as
long as you pay into it for the required number of years you are able to access those government
benefits which just has the one weird Quirk that it's an optional tax well you have to pay it if
you have to pay it but if you don't have to pay it you can still pay it so some people
who are self-employed still opt to make their ni contributions to make sure they're eligible for
the benefits that's it funds so it's not a standard tax but it is taxed in a fairly standard
way tax bands you pay National Insurance in the standard income tax ban approach where on the
hmrc website that's the UK taxation agency ahmrc stands for hey mate right cash and uh they set
uh the boundaries as well as different classes of National Insurance but the vast majority of people
are in category a so you can ignore the other ones that actually means you can ignore that lowest
category because we don't have to use that at all so actually you don't pay any National Insurance
if you're Class A and you're being paid weekly up until you're earning more than 242 pounds a
week or if you're being paid monthly that's 1048 pounds a month and I know this should be obvious
but apparently it isn't you don't pay marginal tax on any amount that's in a different category so
if you're in the tax Band you only pay that rate of tax on money in that band so if you earn 243
pounds a week just going into the next category you don't pay 12 on all of your income you only
pay 12 on however much is in the next band like a pound or whatever it ends up being and anything
in that middle band you're going to pay 12 on and then you go up into the top band which kicks in at
967 pounds a week if you're being paid weekly or 4189 if you're being paid monthly and then above
that it's only 2 which is a bit weird most tax bans the rate keeps going up it's a progressive
tax so you know everyone pays their fair share but because National Insurance you're paying into a
very set pot for very predefined benefits once as an employee you've paid your contribution you're
done so you've got that one big 12 rate for the middle band and then above that a mere two percent
so far so standard like your accountant could have told you all this but what your accountant won't
tell you is why hmrc are using such a weird ratio to go from months to weeks because I saw this page
and I was like wait a minute how on Earth are they going between those and I divided one by the other
and it turns out they're using four and a third weeks per month so if you take the monthly amounts
as like the canonical tax Band and then you divide those amounts by four and a third weeks per month
and then round to the nearest pound you get the weekly bans that makes sense but there aren't
four and a third weeks in a month it's a different ratio however to work out that ratio we need to
start with how many days are there actually in a year and that gets a little bit complicated
the standard leap year has 365 days except when it doesn't then it has 366 in a leap
year and your standard issue one new leap day every four years gives us an average in the
Julian calendar of 365.25 days except the Earth's orbit isn't 365 and a quarter days it's 365.2422
so what we do across four centuries instead of having the full 100 extra days we skip all the
years which are a multiple of a hundred that takes four out brings us down to 96 but then
we unskip all the years which are a multiple of 400 that 97 extra days every four centuries
gives us an average of 365.2425 days per year close enough except none of us are going to
have careers that span for centuries and the next time we deviate from the one in four leap
year approach it'll be the year two thousand one hundred and I really hope I'm not still
working then so for all of us we're going to be working when there's 365.25 days per year that's
what I'm going to use for all my calculations you divide that by seven and you get 52.17857
weeks per year divide that by 12 and it turns out there are 4.34821 weeks per month fun side
fact you can actually just work out the average number of weeks per month for both 365 and a 366
day year and then average the two waiting them three to one and you get exactly the same answer
so what does this mean for tax bans well we can use this information to scale everything
up to be your per annum salary or rather what the amount per year is for each of the categories if
we multiply the lower tax ban for monthly people by 12 we see the ni contributions kick in with
an annual salary of 12 576 pounds assuming that they're paid equally across every single month and
yes income can go up and down depending on your sort of employment we're going to ignore that for
my approximation because most people approximately are paid the same amount every single time you
just divide your income up across your pay periods now weekly people we can take the weekly lower
bound multiply it by the number of weeks in the year now that we know that exactly and you get 12
627 pounds which is bigger that means if your paid weekly instead of monthly you need to earn more
money before you start paying National Insurance that's a difference of 51 pounds and 21 Pence
51 pounds and 21 pounds that people who are paid monthly have to pay an eye on for people who paid
weekly don't and because the tax rate is 12 you're paying an extra six pounds and 15 Pence of n i so
there you are if you're paid monthly you're paying six pounds and 15 Pence more than you need to for
exactly the same benefits as people who pay weekly I accept the next tax Band changes everything
for some reason hmrc are using their incorrect conversion ratio in such a way that people who pay
monthly always get to the next category first and if National Insurance was a standard progressive
tax would the rate keeps going up that would always be bad for people who pay monthly but and I
goes down goes from 12 down to two percent and people who pay monthly hit that drop back down
again 188 Pounds and 68 Pence before the people who pay weekly so they pay 10 percent less tax on
that 188 Pounds and 68 Pence which is 18 pounds and 87 Pence so people who pay monthly pay that
extra six pound fifteen going into the first band but then they pay 18 pounds 87 less coming
out of it so actually if you run the numbers people who pay weekly spend longer in the more
expensive band than people who pay monthly if you compensate one against the other the difference is
12 pounds and 72 Pence so once you're in the top category people are paying monthly are saving 12
pounds and 72 Pence compared to people who pay weekly to recap up until an annual salary of
twelve and a half thousand pounds no one pays any ni tax that's very fair above that if you're paid
monthly you're paying an extra six pounds and 15 Pence more than if you were paid weekly and that
carries on until an annual salary of 50 and a half thousand pounds and the median UK salary is in
that range above 50 and a half thousand pounds it flips and if you're paid weekly you're now paying
12 pounds and 72 Pence more than people who pay monthly and that carries on for any salary greater
than that hello to everyone who skipped straight here from the beginning of the video now we're
been throwing a lot of numbers around here six pounds 15 a year 12 pound 72 but what do these
numbers actually mean what are people missing out on because they have to pay this extra tax well we
can see what those amounts of money actually buy you in the UK in 2023 by going out and doing some
shopping because I'm not here by myself I've got Alex a camera person I've got Nicole the
producer so all three of us are going to head on down to Sainsbury's and see what we can buy
foreign [Music] 6 pounds and 15 Pence a year is roughly 51p a month and 12 pound 72 is a pound
and six pence a month so we had to find things you can buy from the grocery store as close to
those two monthly values as possible and as a bonus round we could try and find things that
equal the entire annual values we split up and decided we had exactly 10 minutes before we had
to meet back at the cash registers and here is our haul all right oh and the receipt better keep that
I can claim that more expenses get my tax bill down what do you mean that's not how that works
what do you mean I can't spend my way out of this that's ridiculous right surely I spend more money
oh yeah that's not how it works okay so anyway this is a grapefruit that cost me 55 Pence for
one fruit outrageous but in my case pretty close to 51p a lot of things were 50p but I
was like that's I don't like round numbers bang 55 pants and then over here one pound
and nine pens again lots of things for a pound but I thought a pound nine Pence is actually
closer to a pound and six so I was very pleased with that so there's my egg Mayo Deli filler
so if you've got a deli to fill egg mayo and my grapefruit but let's see how the rest of
the team did okay so um Alex well done uh bought a tiny chocolate bunny that's
pretty exciting the tiny chocolate bunny cost 60 Pence 60 Pence check out 60 pounds have a look
just sending that back for verification someone got ripped off did you think of those are 50p
bunny it said 50 Alex claims it was 50p we'll uh we'll go to the camera get a replay on that
yes and the candle five pounds was that is that your so if I hit Alex you can't see this because
he's behind the camera he's the natural habitat of the camera person he's now on his own phone
reviewing the footage of him walking around the supermarket because he was not expecting
this to be five pounds but I'm looking I'm looking at five pounds on the receipt wow
someone Alex I mean I don't want to give you a let's just say I'm going to give you a c minus
for could have done better I spoke too soon clutch play by Alex forget the weekly stuff went for the
annual 12 pound 72 Pence and bought 12 pounds 74 Pence of disgusting boneless lamb shoulder
joint so I'm gonna Award Best annual amount to Alex I'm not going to show this again but if
you're paid weekly and you earn more than 50 and a half thousand pounds in the UK the government
is taking one of these away from you every year everything else in here is Nicole's and Nicole
I can't have but notice there are many many items there are more you went for summation
uh so the SpaghettiOs and the tarragon are a team all right let's add these up the SpaghettiOs
uh one pound and five pence and the tarragon 90p so a pound 95.
they said they were 16 16p for an entire can of Hubbard's food store it was
okay pound six minus 16p is the 90p nice around Monday okay either Sainsbury's uh indulging in
some um misleading pricing or the stand-up math team require lessons in reading comprehension so
how is this fixed well hmrc just have to use the correct ratio I have no idea why they use four
and a third weeks per month I guess it's easier to calculate I don't know if anyone knows please do
let me know but they should be using the correct ratio of 4.34821 weeks per month and that fixes
everything so we can fix the monthly bands where they are and then do the correct conversion to get
the weekly ones and the whole system works nicely so they just need to fix that one thing and then
once that's dealt with no longer will people who are paid monthly have one fewer grapefruit a month
no longer were people who were paid weekly and May a lot of money have one fewer delicious egg
Mayo Deli filler per month if we fix this problem this horrific problem in the tax system we can
make National Insurance contributions there once and for all and uh all I have to do now is fix my
tax payment issues and don't worry I have a plan thank you so much for watching this video I hope
you enjoyed the one weird Quirk I found in the UK tax system I'd like to finish by saying thank you
so much to all my patreon supporters your one weird Quirk that I found in the how nice you
all are system I guess but anyway genuinely honestly thank you so much to all my patreon
supporters and don't worry if you can't afford to support me that's fine just enjoy the videos the
people who do support me you took I mean I used to do this as a hobby make occasional videos in
my spare time but now it's a substantial part of my career and I can make all the videos I want and
honestly the more support you me the more amazing videos I will make I promise I'll spend all your
money on making videos I hear in England and uh absolutely not doing anything else with that money
now I have to go see a person about a thing [Music]