SMP for a company director

SMP for a company director

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I have recently taken on the payroll for a local limited company, 14 employees in total.

The director is about to have a baby. She currently pays herself £596 per month salary (draws rest as div). I have decided to put her salary element through the payroll system along with all the other employees - it doesnt really make any extra work because she is paying no tax or NI on the £596, but I decided it was easier to have her on the system with all the other employees.

She hasnt yet asked about SMP, so I was going to broach the subject with her... but before I do so, I wanted to clarify the following:

(1) Can she claim SMP based on her earnings - I believe she can (she's getting approx £137.53 per wk, and LEL is £107)

(2) Is it deemed 'ok' to keep her monthly pay at £596? (because this standing order is set up from Company account to personal account & she won't want to change it), but of this amount, the bulk of it will be SMP, and then 'topped' up with basic pay - I will do this through the payroll prog.

(3) Am I right in assuming that the SMP recovery will be via monthly PAYE (rather than waiting for a big lump sum payment at the end of the year)?

Thanks in advance....

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Euan's picture
By Euan MacLennan
18th Oct 2012 18:12

Answers
YesYesYes, at 103% of the SMP paid (assuming that the total Class 1 NIC payable in 2011/12 was less than £45,000).

Don't forget that SMP is the lesser of 90% of earnings and £135.45 a week, so on earnings of £137.53, she can be paid only £123.78 a week for up to 39 weeks.

However, the biggest problem is if the director is the owner and cannot stop herself coming into the office to keep an eye on things.  Apart from 10 KIT days, if she works at all, however part-time, in any week, SMP cannot be paid for that week.

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By southgirlaccountant
18th Oct 2012 18:42

Many thanks....

I'll be sure to remind her about the 10 KIT days....she is the owner, and whilst she's handed acting manager role over to the assistant manager for the term of her mat leave, she will no doubt want to keep in touch during her leave.

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