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SMP

Dear All

Happy New Year - think it's my first post of teh  year - now what have I been up too.... ah yes pulling my hair out at clients who say - "yep will get onto my tax info week after next if that's OK....?"

Anyway - really easy question for those who know the answer.

I have recently taken on a small company client where the directors are Husband and Wife, each have been working in the business for 5 years or so and take small salary big dividend. I am in the process of doing their 2012 tax returns.

In Feb-12 Wife had a baby but previous advisor didn't claim any SMP on the grounds that "the company has not paid any NI in the past therefore you can't claim SMP" (that's what previous advisors email to my client stated back in December 2011 when they asked him about it)

I must confess I have never had one of my sole or husband and wife director companies have a baby (well the wife that is not the company!) and so hadn't thought about it.

I have looked at  the guidance and read threads on here and it seems that he may have been wrong however some HMRC guidance seems to back up what he has said

If they could have claimed can they claim now? For this and last tax year? (Wife has been receiving £624/month every month this year but I guess that could be reclassified as SMP plus a top up? - If they can claim it is quite a big number and potentially they have missed out.

Any help from those better versed in SMP that I would be very very welcome!

Not  a January SA deadline question I know so apologies for diverting away from the main theme of the month!

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By imbs
10th Jan 2013 22:39

I always assumed yes
I thought the beauty of small earnings top up dividend was that you qualify for all state benefits and pension years as long as salary is within ET and LEL ie from benefits/pension point of view you have all the same entitlements as someone earning a high salary. I've never had to claim on it though for clients so havent seen the practical side.
Hopefully someone can clarify with a definite answer...

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11th Jan 2013 13:48

Thanks for the replies

The reason I questioned it was that it talks about (the HMRC guide and then the Handbook document) not having paid NIC in prior years or the relevant period and therefore not enough contributions have been made

Are we therefore saying that they will be able to claim SMP for the current year (2012/13) and would you advise waiting for the end of year P35 or should we contact HMRC sooner

Sorry to ask what is probably a simple question but I want to be sure they can now recover some of the monies

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By Luke
11th Jan 2013 14:38

But of course they have 'paid' NI even if it was at 0%

That's the beauty of paying the magic £624 per month.

I have a H&W company where the wife is currently on maternity leave, and she is validly claiming SMP.  (Let's not mention that they misread the guidance and tried including the dividends in the earnings for SMP purposes...)

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By Luke
11th Jan 2013 14:42

Reclaiming it

In this case they are claiming it against the other employees PAYE/NIC quarterly payments but I have personally claimed SSP for myself (sole director limited co.) after an operation and asked for advance funding via the link below as I don't have any PAYE/NIC to pay over normally.  I had no trouble at all.

Link below deals with claims in previous and current tax years,

http://www.hmrc.gov.uk/paye/employees/statutory-pay/funding.htm

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