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Maternity Pay

Maternity Pay

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Hi Guys,

How does it work with maternity pay if the person is an employee of their own lmited company and only pays themselves below the threshold so no tax is due?

Can they still make a claim?

Thanks guys.

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By paul.benny
31st Dec 2019 11:17

Presumably you have read the guidance here: https://www.gov.uk/maternity-pay-leave

Which part are you having trouble with?

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RLI
By lionofludesch
31st Dec 2019 11:19

Well, that depends on which threshold you're talking about*. Tax threshold is £12,500 so they'd still get it at that level.

Worst that can happen is they claim Maternity Allowance from the Job Centre.

The trick is to prevent that situation from arising.

Read the rules and adjust the salary.

*Key piece of information missing.

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Replying to lionofludesch:
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By Matrix
31st Dec 2019 11:28

Most clients don’t tell us in time to do this.

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Replying to Matrix:
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By lionofludesch
31st Dec 2019 11:44

Most of my clients don't get pregnant.

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By khalm0
31st Dec 2019 11:28

sorry should have been more clear.

The salary is £12500 so there is small NI payments due. There is never big enough payments made to HMRC monthly from which to deduct an amount for SMP to pay to the employee. this is where I get confused!

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Replying to khalm0:
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By lionofludesch
31st Dec 2019 11:30

khalm0 wrote:

sorry should have been more clear.

The salary is £12500 so there is small NI payments due. There is never big enough payments made to HMRC monthly from which to deduct an amount for SMP to pay to the employee. this is where I get confused!

Oh right. Well that's a different issue to what I thought.

You can apply to HMRC for funding.

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By Matrix
31st Dec 2019 11:31

The employer can apply for advanced funding.

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By Matrix
31st Dec 2019 11:38

https://www.gov.uk/recover-statutory-payments/if-you-cant-afford-to-make...

HMRC don’t automatically offset the funding with the SMP recoverable on the EPS, you usually have to call up the employer’s helpline.

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Replying to Matrix:
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By lionofludesch
31st Dec 2019 11:46

Matrix wrote:

HMRC don’t automatically offset the funding with the SMP recoverable on the EPS, you usually have to call up the employer’s helpline.

I've never done this.

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By Matrix
31st Dec 2019 11:55

I must admit this doesn’t happen to me every day either but the two clients who had PAYE funding this year also had bills from HMRC, so I had to ask them to match them up.

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By lionofludesch
31st Dec 2019 11:59

What I have had is HMRC seeing unpaid SMP as a debt owing back to them and sending a bill.

But I haven't had that for years now.

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By khalm0
31st Dec 2019 11:48

OK thanks - that makes sense so far.

Is there an income cap after which there is no statutory SMP available? On top of the 12.5k salary, the director will declare a 30k dividend on the self assessment.

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By lionofludesch
31st Dec 2019 11:51

You seriously need to read up on this.

Only earnings count.

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Caroline
By accountantccole
31st Dec 2019 13:15

Planning!!
My clients of child bearing age have been told to let me know as early as possible so we can do some planning with timings of salary etc!

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Replying to accountantccole:
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By lionofludesch
31st Dec 2019 13:25

I do the same - just the ladies though.

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By bendybod
31st Dec 2019 15:13

Dangerous strategy in the days of shared parental leave and statutory shared parental pay.

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By bendybod
31st Dec 2019 15:14

And adoptive parents don't even necessarily need to be child bearing age....

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