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Who pays statutory maternity pay (SMP)? Employer or the government?

Maternity Leave

When you take time off to have a baby you might eligible for Statutory Maternity Leave. Employees employment rights are protected while on Statutory Maternity Leave. This includes your right to:

·       pay rises

·       build up (accrue) holiday

·       return to work

The cost of employing someone who goes on to claim for UK statutory maternity pay, can feel like one of a long list of financial commitments. It’s also another administrative requirement for growing, owner managed businesses. Now question is who pays UK statutory maternity pay?

Who pays statutory maternity pay? Employer or the government?

Who pays UK statutory maternity pay (SMP) depends on the size of the business. An employer can claim potentially all, or most, of this money back from HM Revenue & Customs (HMRC) depending on their class one National Insurance contributions.

How much SMP is recoverable by an employer?

If a UK business has paid less than £45,000 in class one National Insurance contributions over the last tax year, then the full SMP can be claimed plus an extra 3% on top. Larger employers, can claim back 92% of SMP. 

How much SMP are employees entitled to?

Your employees are permitted to up to 52 weeks maternity leave. Employers have to pay 39 weeks of SMP to new mothers. That is the minimal requirement. However, you can be generous and offer more if you so please.

The first 26 weeks (6 months) is known as ‘Ordinary Maternity Leave’. The last 26 weeks is known as ‘Additional Maternity Leave’. SMP is the legal minimum you must pay employees for this type of leave. Employees qualify if they:

       ·       Earn at least £123 a week on average

·      Have worked for the employer for 26 weeks prior to the 15th week before their due date

SMP has to be paid at 90% of average weekly earnings before tax for the first 6 weeks. The employee has to provide you with their MATB1 form from their midwife. The information on this form ascertains the qualifying weeks and the amount to be settled to the employee for the 6 weeks at the required 90% pay.

After the 6 weeks, you either continue to offer this figure or £156.66 a week (whichever is lower) for the remaining 33 weeks. A Mother can take a further 13 weeks of maternity leave on top of that, but this then goes unpaid.

The Qualification rules

The earliest maternity leave can be taken is the 11th week prior to the due date. If the baby is born early then the leave starts on the day after the birth. The employee must give you the child’s birth certificate, or documents signed by a doctor or midwife. These will confirm the date of birth. You must write to them stating the new end date for their leave. 

To claim SMP, your employee must tell you that they’re going on maternity leave. This request must be made at least 15 weeks before the baby is due. This highlights the need to communicate your policies very clearly with staff if you have a maternity scheme. 

Even if you have been trading for a while as a Sole Trader or Partnership and have decided it may be time to change, it can be complicated trying to decide when, and if, you should change structure. Let’s face it, trying to find simple jargon free help and advice on this topic in one place is quite difficult. 

How to claim back maternity pay as an employer 

If you use payroll software, this may have the functionality to: 

·        Calculate your claim and;

·       Put the paperwork together for HMRC to process your refund 

Where your payroll contain directors or employees, where PAYE payments are minimal each month, there will be little to no PAYE liability to offset the maternity reclaim against. You can claim the funding in full in advance of the maternity starting. It’s then deposited into your business bank account within 10 days of the claim being made. 

Help with statutory pay for employers 

For financial help with statutory pay, employer can: 

·       reclaim payments (usually 92%)

·       apply for an advance if you cannot afford payments

If your business need help on maternity leave pay or if you have any questions around SMP, please contact with zatrsaccounting professional accountant.



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Our blogs and articles are for information only. If you need help with your specific tax problem or need advice for your business please call us on +44 (0) 179 570 4085

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