Are you a small business employer with an employee going on Maternity Leave and are you wondering how to deal with their Maternity Pay?
Your first employee going on Maternity Leave can be a daunting prospect. Are they entitled to Statutory Maternity Pay (SMP) and if so how much? How to you claim the money back from HMRC?
This article aims to guide you through this process.
Statutory Maternity Pay (SMP)
Statutory Maternity Pay (SMP) is paid for up to 39 weeks. The employee is entitled to:
• 90% of their average weekly earnings (before tax) for the first 6 weeks
• £139.58 or 90% of their average weekly earnings (whichever is lower) for the next 33 weeks
SMP is paid in the same way as their wages (eg monthly or weekly). Tax and National Insurance will be deducted.
Your payroll software may guide you through the SMP process but HMRC have a really fab tool you can use:
gov.uk maternity paternity calculator
To use the tool you will need to have the following information handy:
• the baby’s due date
• date of birth – for paternity
• your employee’s salary details, eg weekly rates of pay
• the dates for adoption, eg match date and date of placement
The tool gives you a handy summary of the information which you have input and summarises what the employee is entitled to and when.
How to reclaim SMP from HMRC
If your employee is entitled to SMP there are a number of routes as to how you can reclaim this cost from HMRC.
- If your PAYE and NI bill is larger than the SMP you expect to pay in the tax year then the SMP is simply offset against the PAYE and NI you over (whether paid monthly or quarterly) meaning that your PAYE/NI bill is reduced for the period of the SMP. Your payroll software will deal with this for you.
- If your PAYE/NI bill is not large enough to cover the SMP due, you can complete the following form up to four weeks before your employees expected Maternity Leave start date:
Links to forms for other Statutory Pay items, eg Statutory Paternity Pay, Statutory Adoption Pay
gov.uk maternity paternity adoption reclaim forms
To complete these forms you will to have the following information handy:
– Your accounts office (Shipley or Cumbernauld)
– Accounts Office reference
– PAYE reference
– Business details
– Business bank details (for advance to be paid into)
– Employee details for member of staff going on leave (including NI number and expected date of delivery)
– Details of the SMP calculation (the output from the maternity-paternity-calculator (linked to earlier in this article) is very useful for this section
Make sure you save a screen shot of the form once complete and then submit. You should expect to receive the advance within 6 working days of submitting the form. I have recently completed one of these forms (as of February 2016) for a client and the money was received within this timescale.
Other things to consider
As a small business employer you also need to ensure that you are consider the employment rights of the individual and consider there health and safety. You can read more about these here: gov.uk maternity pay and it may be worth seeking HR advice.
Please feel free to get in touch with us to discuss how this article impacts you further. If you feel now is the time to start out-sourcing your payroll please feel free to get in touch. You can find information on our prices here.
JLA Accounting Limited takes every care in preparing material to ensure that the content is accurate and up to date. However, no responsibility for loss for anyone acting from or refraining from acting as a result of this information can be accepted by JLA Accounting Limited.
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