Morning,
Hope someone can point me the correct direction. Limited company client - Directors wife who works in the business going on maternity - she currently has earnings of £1500 net per month, which would drop to circa £800 with SMP.
What is the rule regarding SMP? Can we pay her SMP (so we can claim back 92% of this), as well as pay her normalish pay, so that she is no better/worse off per month in her pay packet. Effectively smp with a top up by the company - she will not be working during this period.
Thus, wife (employee) no worse off when she goes on maternity, but the company benefits from smp reclaim. I've seen various posts all saying different things about the purpose of smp is a substitute for usual pay etc, so confused as to whether we can have both?
thanks in advance
cheers
mick
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Replies (4)
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SMP
Hi Mick,
Yes you can top up the employee's pay.
You can put a payment through for the difference to normal pay, then you would recover 92% SMP from the HMRC liabilities.
or, you can continue to have the normal salary payment showing and then also have a contra amount to the SMP.
The top up is usually referred to as Occupational Maternity Pay.
I have clients that do it both ways.
I hope that helps
Kevin
Top up
Yes - I agree that you can top up her statutory maternity pay with occupational maternity pay. Both are taxable and NICable.
Presumably, the total Class 1 NIC (Ees' and Er's) paid by the company for 2014/15 was more than £45,000, because if not, you could recover 103% of the SMP (but not the OMP).
Thanks Kevin/Euan
Your help is most appreciated.
Euan - yes we're actually talking 103% reclaimable, so thanks for that
Cheers
mick
follow up query - occupation maternity pay and smp
Morning,
Following on from previous post - can I pay employee normal full pay (and we call that occupational maternity)
On top of normal pay, can we then pay her smp as well. Whilst she is a long term employee of the company, there is no written contract
So effectively she gets more than her normal pay during maternity leave, and employer claims back 103% from HMRC? Win Win
I seem to have this idea in my head that SMP is there to support employees through maternity, if my question above is confirmed as ok and correct, it seems employee and company are better off with employee on maternity, and I'm not sure that is the purpose of SMP?
appreciate any advice - struggling to find anything on this subject
cheers
mick