Payroll - Dealing with statutory payments

Statutory Maternity Pay (SMP)

Eligible employees can take up to 52 weeks' maternity leave. The first 26 weeks is known as 'Ordinary Maternity Leave', the last 26 weeks as 'Additional Maternity Leave'. The earliest that leave can be taken is 11 weeks before the expected week of childbirth, unless the baby is born early. Employees must take at least 2 weeks after the birth (or 4 weeks if they are a factory worker).

Statutory Maternity Pay for eligible employees can be paid for up to 39 weeks, usually as follows:

• the first 6 weeks: 90% of their average weekly earnings (AWE) before tax
• the remaining 33 weeks: £184.03 (from 6 April 2024) or 90% of their AWE (whichever is lower)

Tax and National Insurance need to be deducted.

Statutory Paternity Pay (SPP)

Employees may be eligible for Statutory Paternity Leave and Pay if they and their partner are:

• having a baby
• adopting a child
• having a baby through a surrogacy arrangement

Employees can choose to take either 1 week or 2 consecutive weeks' leave. The amount of time is the same even if they have more than one child (for example twins). Leave cannot start before the birth. The start date must be one of the following:

• the actual date of birth
• an agreed number of days after the birth
• an agreed number of days after the expected week of childbirth

Leave must finish within 56 days of the birth (or due date if the baby is early). The start and end dates are different if the employee is adopting.

Statutory Paternity Pay for eligible employees is either £184.03 (from 6 April 2024) a week or 90% of their average weekly earnings (whichever is lower).

Tax and National Insurance need to be deducted.

Statutory Adoption Pay

When an employee takes time off to adopt a child or have a child through a surrogacy arrangement they might be eligible for Statutory Adoption Pay and Leave.

Employees can take up to 52 weeks' Statutory Adoption Leave. The first 26 weeks is known as 'Ordinary Adoption Leave', the last 26 weeks as 'Additional Adoption Leave'. Leave can start:

1. on the date the child starts living with the employee or up to 14 days before the expected placement date (UK adoptions)
2. when an employee has been matched with a child to be placed with them by a UK adoption agency
3. when the child arrives in the UK or within 28 days of this date (overseas adoptions)
4. the day the child's born or the day after (parents in surrogacy arrangements)

Statutory Adoption Pay (SAP) for employees is:

• 90% of their gross average weekly earnings for the first 6 weeks
• £184.03 (from 6 April 2024) a week or 90% of their gross average weekly earnings (whichever is lower) for the next 33 weeks

Tax and National Insurance need to be deducted.

Statutory Shared Parental Pay (ShPP)

Eligible employees and their partners may be able to get Shared Parental Leave (SPL) and Statutory Shared Parental Pay (ShPP) if they are having a baby or adopting a child. They can share up to 50 weeks of leave and up to 37 weeks of pay between them. They need to share the pay and leave in the first year after the child is born or placed with the family. They can use SPL to take leave in blocks separated by periods of work, or take it all in one go. They can also choose to be off work together or to stagger the leave and pay.

Statutory Shared Parental Pay is paid at the rate of £184.03 (from 6 April 2024) a week or 90% of their gross average weekly earnings (whichever is lower)

Tax and National Insurance need to be deducted.

Statutory Parental Bereavement Pay (SPBP)

An employee may be eligible for Parental Bereavement Leave and pay if they or their partner either:

• had a child who has died under 18 years old
• had a stillbirth after 24 weeks of pregnancy

Statutory Parental Bereavement Pay is paid at the rate of £184.03 (from 6 April 2024) a week or 90% of their gross average weekly earnings (whichever is lower)

Tax and National Insurance need to be deducted.

Statutory Sick Pay

Your employees may be eligible for Statutory Sick Pay (SSP), which is £116.75 (from 6 April 2024) a week for up to 28 weeks. You can offer more if you have a company sick pay scheme (you cannot offer less). Company schemes are also called 'contractual' or 'occupational' sick pay and must be included in an employment contract.

Tax and National Insurance need to be deducted. Payments of SSP cannot be recovered from HMRC

Setting up the payroll for statutory payments

Calculate the amounts of statutory pay

Firstly calculate an employee's maternity, paternity or adoption leave and pay using the HMRC maternity and paternity calculator Keeping a note of the calculated payment figures.

Calculate an employee's sick pay using the HMRC sick pay (ssp)calculator Keeping a note of the calculated payment figures.

Set up the payroll element for a statutory payment

Navigate to configure payroll from the payroll menu.

Payroll - Configure Payroll - Payroll Elements

Click ADD ITEM and give the element a name (this will appear as a line on the pay-slip) and select from the Element Type drop down the appropriate type, either:

• SSP - Statutory sick pay
• SMP - Statutory maternity pay
• SPP - Statutory paternity pay
• ShPP - Statutory shared parental pay
• SAP - Statutory adoption pay
• SPBP - Statutory Parental Bereavement Pay

Select the relevant payment pattern and tick each of the Impacts PAYE Gross and NI Gross boxes as well as the impacts Pension box if appropriate. Click SUBMIT to confirm.

Enter the payment amounts

In the usual way add the amount (as calculated) to the employees pay.

Personnel - Manage Employees - Pay and Deductions - ADD ITEM and select the new statutory pay element

Run the payroll

Once all items for all employees have been entered relevant to the particular payroll; run it in the normal way.

Payroll - Payruns

Reports

Details of statutory payments made to a particular employee are shown on their payslip and the p11. The summary position for the organisation as a whole is shown on the p32.

Processing an EPS (Employer Payment Summary)

An EPS is filed for a pay period when there are statutory payments and compensation to recover (SMP, SAP, ShPP).

Any figures in an EPS are on a cumulative basis for the PAYE Year and when run will include the figures for all payrolls finalised (weekly, two weekly, monthly etc.) since the last time an EPS was filed. It would be normal to run the EPS at the end of particular PAYE month.

An EPS is usually filed after closing all payrolls and filing all FPS's for the PAYE period and in essence explains to HMRC why the deductions shown on the FPS's are not paid over in full due to any recovered amounts of statutory pay and compensation. File an EPS from the HMRC menu.

HMRC - Payroll Returns(RTI) - EPS - click the red + button to start a new eps filing

Payments to HMRC

Once all payrolls in the PAYE period have been closed and FPS and EPS returns filed use the P32 report to find the amount of deductions that need to be paid over to HMRC. Make the payment to HMRC by the 19th of the subsequent PAYE period at the latest.

Accounting

As each payroll (weekly, monthly etc) in a PAYE period are closed the system posts the deductions (PAYE, NIC etc) to Current Liability accounts. Because each payroll may have statutory pay and compensation recoverable from HMRC the total in any PAYE period cannot be known until all payrolls have been run.

The difference between the P32 report and the amounts that have been posted from each payroll run in the PAYE period will be recorded by a system generated journal.

Whilst when an EPS is filed the figures sent to HMRC are cumulative for the current income tax year the system journal values are on a net change basis from the last time an EPS was file. The date of the journal is the EPS filing date.

The journal will Debit (reduce) the HMRC Liability and Credit the Statutory Payroll Costs Recovered account, thereby reducing the expense. So in the example above

• Debit - HMRC £860.59
• Credit - Statutory Payroll Costs Recovered £860.59

Related Topics

• Payroll - Overview
• Payroll - Running a Payroll
• Manage Employees