SMP reclaimable by employer

SMP reclaimable by employer

Didn't find your answer?

I understand that if an employer pays his employee SMP, then he can reclaim SMP.

How is this done?

Is it through NI and PAYE (Ie he deducts it from NI and PAYE he has to pay to HMRC)

How much is reclaimable.  I have heard there are two amounts you can reclaim.  (103% or 92%)

Surely if it is 103%, he is actually benefiting from an individual being on maternity leave?

Replies (17)

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By DMGbus
31st Jul 2014 23:07

EPS mechanism - SMP

A monthly EPS should be filed under RTI from the payroll software being used.

The amount of SMP recoverable should be computed by the software, and running a P32 in the software should show this credit.

By filing an EPS HMRC should credit the PAYE account for the recoverable SMP.

If the SMP recovery exceeds PAYE/NIC/CIS liabilities then a funding request can be made to HMRC.

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Stepurhan
By stepurhan
01st Aug 2014 08:54

Benfiting?

An employee on maternity leave is not doing any work on behalf of the company, but that work still needs to be done. However, the person on maternity leave is entitled to return to their job when that leave is up. Unless an employer is exceptionally lucky, they are unlikely to be able to employ a really skilled person for such a short period. They are more likely to need a temp, with higher cost, or somehow get that work done by other staff, with their workloads suffering accordingly.

Given the limits on SMP, that additional 3% reclaim (which is only available to smaller employers anyway) is unlikely to be compensation enough.

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By dnicholson
01st Aug 2014 09:43

NI
It's compensation for the NI you pay.

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Replying to gainsborough:
RLI
By lionofludesch
01st Aug 2014 09:55

Happen .....

dnicholson wrote:
It's compensation for the NI you pay.

.... but it's a rough and ready measure.

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Replying to gainsborough:
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By Alan Deakin
01st Aug 2014 16:53

In what way?  I thought

In what way?  I thought employers pay NIC at 13.8%.

If someone is on maternity leave, would NIC be payable  maternity pay?

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Replying to Accountant A:
RLI
By lionofludesch
01st Aug 2014 17:07

SMP Compo

Alan Deakin wrote:

In what way?  I thought employers pay NIC at 13.8%.

If someone is on maternity leave, would NIC be payable  maternity pay?

Yeah, but it's not 13.8% on all of it, is it ?  There's a threshold.

As I said, it's a rough and ready measure.

SMP - like SSP - is subject to NIC.  But, often the employee doesn't earn enough to pay it.

The 92% is for large employers, the 103% is for small ones.

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By dnicholson
01st Aug 2014 17:56

From the horse's mouth
To quote last year's E15 from HMRC:

"If your annual liability for Class 1 NICs is £45,000 or less you are entitled to:
• 100 per cent of the SMP, and
• an additional amount as compensation for the NICs you pay on the SMP. The compensation rate for 2013–14 is 3 per cent."

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RLI
By lionofludesch
03rd Aug 2014 09:06

Just shows

You can't believe what HMRC say in their manuals.

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By DMGbus
03rd Aug 2014 11:22

Employer guidance

There used to be a downloadable comprehensive guide .pdf labelled E15, This useful .pdf guide I think, as a search for an upto date one on HMRC website failed to find a recent version, might have been replaced by disjointed guidance on .gov.uk.

Here's the relevant page:

https://www.gov.uk/recover-statutory-payments

 

 

 

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By dnicholson
03rd Aug 2014 13:04

Just shows

lionofludesch PM | Sun, 03/08/2014 - 09:06 | Permalink

@lionofludesch

"You can't believe what HMRC say in their manuals"

No, the break even point for SMP with 103% reclaim in 2014-15 is £451 per week of earnings. Pay below that and you recover more than it costs, pay above and you recover less.

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RLI
By lionofludesch
04th Aug 2014 09:38

I would like ....

.... to know if anyone has actually recovered exactly the NIC that they paid.

Just idle curiosity, obviously.

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By dnicholson
04th Aug 2014 09:48

Can't be exact
So if a father gets some SPP and has his pay topped up to above the NI threshold, did he pay NI on his SPP or on his wages?

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RLI
By lionofludesch
04th Aug 2014 17:06

Neither

He pays NI on what he's paid.

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Replying to Tax Dragon:
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By dnicholson
04th Aug 2014 21:44

??

lionofludesch wrote:

He pays NI on what he's paid.

Then the employer would recover NI on wages paid as opposed to SPP.

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Replying to paul.benny:
RLI
By lionofludesch
05th Aug 2014 17:35

Yes - it's nonsense

dnicholson wrote:

lionofludesch wrote:

He pays NI on what he's paid.

Then the employer would recover NI on wages paid as opposed to SPP.

Indeed.  Although HMRC say that it's compensation for employer's NIC, it's no more than a gesture.  There are winners and losers.

Try this one - employer's NI is different for SPP paid to weekly paid and monthly paid employees.  Yet the compensation is still 3%.

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Stepurhan
By stepurhan
05th Aug 2014 10:38

Getting confused

The reclaim is based on the amount of the gross SMP/SPP paid, not the amount of NIC associated with it. Anything on top of that is not included in the reclaim calculation.

Whether the reclaim is at 92% or 103% is based on how much NIC the business pays as a whole, not just on the employees on SMP/SPP.

If the SMP/SPP plus any additional amount paid on top is high enough to breach the NIC limits, then NIC is calculated on the whole amount in the same way as any other payment of wages. The NIC is only related to SMP/SPP insofar as that pushes the payment over the limits.

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By dnicholson
05th Aug 2014 20:48

Compensation
It's compensation for NI, not NI.

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