Director claiming SMP

Director claiming SMP

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Have a friend who runs a business with her husband, they are thinking of extending their family and would like to know how and if they can claim SMP. They do not take a salary but transfer funds from the business account to their personal account each month, this is on average maybe 1-1.5k total per mth. If they are running the company where does the money come from to pay themselves SMP? Or is it claimed from HMRC?

The only people currently on the payroll include one who is under the threshold and one taxed at BR, not earning much either.

Thanking you in advance.
Michelle Wools

Replies (5)

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By User deleted
13th Feb 2009 10:57

What are the transfers for?
Are they dividends? Repayment of Directors Loans or Salary? You need to be careful to ensure that all paperwork is done correctly otherwise you could be causing your clients all sorts of problems and tax bills.

Unless employed/self employed elsewhere you should nearly always put directors on payroll paying them £453pm thus getting their NI stamp paid and therefore giving them entitlement to SMP and SPP.

If they are planning a baby and are not yet pregnent then either if they are employed they should start to pay themselves as they can have SMP and SPP from both employers. The 1% tax saving is probably cancelled out by cashflow timings.

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Euan's picture
By Euan MacLennan
13th Feb 2009 10:55

No pay, no SMP
A mother needs to be paid at least the NI Lower Earnings Limit (2008/09, £90 a week; 2009/10, £95) on average in the relevant period to qualify for SMP.

Why on earth do the directors not take a salary of about £450 a month, which is above the LEL but below the Earnings Threshold at which NI contributions become payable, in order to preserve their entitlement to state benefits - not just SMP, but the state pension in due course?

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By geoffwolf
12th Feb 2009 21:06

confused
is it apertnership or is it a ltd company?

Suggest you look up HMRC website re SMP

Basically SMP or Maternity benefit is claimable dependent on NIC or Paroll record.

On small payrolls SMP would be recovered in whole or part througfh the PAYE system.

However make sure your clients qualify. Presumably if a partnership the tfrs to private ac are drawings Do not make the mistake of claiming NIC excetion for low profits.

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By AnonymousUser
13th Feb 2009 10:37

Ltd
Its a Limited company

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By pinkjag
06th Oct 2016 13:39

the director cannot just pay herself money from the company. each time she takes a payment she needs to document what the payment is - salary, dividends, expenses etc. she cannot claim any SMP as she wouldn't meet the qualifying conditions. She would need to go back over every transaction to see what they payments were. If it's not reported as dividends or business expenses, then she must report it through payroll and pay any class 1 NIC and PAYE. If it goes back previous years, she needs to submit an earlier year update

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