Managing statutory payments can be a financial challenge for employers, especially small businesses. Fortunately, financial help with statutory pay is available. Employers can reclaim a significant portion of statutory payments, including Statutory Maternity Pay (SMP), Statutory Paternity Pay, Statutory Adoption Pay, Statutory Parental Bereavement Pay, and Statutory Shared Parental Pay. The amount you can reclaim depends on your business size and National Insurance contributions. Small employers may qualify for Small Employers’ Relief (SER), allowing them to reclaim up to 103% of statutory pay.
Understanding the eligibility criteria, the reclaim process and advance payment options is essential for managing payroll efficiently. This guide provides everything you need to know about financial help with statutory pay. Learn how to reclaim payments, apply for advance funding, and navigate HMRC requirements. If cash flow issues prevent you from making these payments, options exist to secure financial support in advance.
What You Can Reclaim
Employers can typically reclaim 92% of statutory payments made to employees. However, small businesses qualifying for Small Employers’ Relief (SER) can reclaim 103%. This additional 11% covers National Insurance contributions on statutory payments. To qualify for Small Employers’ Relief, your business must have paid £45,000 or less in Class 1 National Insurance contributions in the last complete tax year. The calculation is based on different time frames depending on the type of statutory pay:
- Maternity Pay & Shared Parental Pay: The qualifying week is the 15th week before the expected due date.
- Adoption Pay: The matching week is when the employee is officially matched with a child by the adoption agency.
- Parental Bereavement Pay: The qualifying week is the week before the child’s passing or stillbirth.
Employers who meet these conditions can claim financial help with statutory pay from HMRC, reducing payroll costs and ensuring compliance with employment laws.
How To Reclaim Statutory Pay
Using payroll software, you can easily obtain financial assistance with statutory pay. Follow these methods to effectively recover statutory payments:
- Calculate the Reclaimable Amount: Use your payroll system to figure out how much you can claim back. The software should account for 92% to 103%, depending on eligibility.
- Submit an Employer Payment Summary (EPS): Report the reclaimed amount to HMRC via an EPS submission. This process guarantees that statutory payments are deducted from your PAYE liability.
- Adjust PAYE payments: If the amount reclaimed exceeds what you owe in PAYE deductions, HMRC will reduce your remaining responsibility proportionally.
- Request a Direct Repayment (if necessary): If you cannot offset the payments against the current year’s responsibilities, you can write to HMRC to request a refund.
Where to Send a Written Request
If you need to request repayment by post, please mail your claim to:
National Insurance Contributions and Employers Office
HM Revenue and Customs
BX9 1BX
Employers who implement this procedure correctly can reclaim financial assistance with statutory pay without disrupting their payroll.
What to Do If You Can’t Afford Payments?
If your company is struggling with cash flow, you do not have to postpone employee payments. HMRC provides advance financing for statutory maternity, paternity, adoption, shared parental, and bereavement payments. This ensures that employees receive their wages even if your company cannot repay the expenditures upfront.
Who Can Apply for Advance Payments?
Employers who lack the finances to pay statutory benefits may ask for advance funding. Nevertheless, you must:
- Be an active employer with an HMRC PAYE reference.
- Have insufficient funds to cover statutory pay
- Apply for at least four weeks before paying the first payment.
Applying ahead of time for financial assistance with statutory pay avoids payroll interruptions and assures legal compliance.
How to Apply for Advance Payments
Employers can apply online for advance payments for statutory pay. The method is straightforward, but precision is critical to avoiding delays. Follow these steps to get financial assistance:
1. Gather Required Information: Before you apply, make sure you have:
- Your HMRC PAYE reference.
- Your Accounts Office reference
- Employee information (name, National Insurance number, and starting date)
- Relevant statutory pay details (expected due date, adoption date, or parental leave start date)
2. Submit an Online Application: Use HMRC’s online system to request advance funding. You can apply up to four weeks before making your first payment.
3. Await HMRC approval: If granted, HMRC will transfer the cash immediately to your bank account. Make sure your sort code, account number, and business information are right.
4. Report Payments on an Employer Payment Summary (EPS): Each time you pay statutory benefits, submit an EPS to inform HMRC and adjust your balance.
Special Cases for Statutory Parental Bereavement Pay
There is a distinct process for obtaining an advance for Statutory Parental Bereavement Pay. Check the HMRC recommendations to ensure you’re following the correct approach.
Penalties for Incorrect Applications
Submitting inaccurate information might result in penalties of up to £3,000 per employee each tax year. Before applying, make sure all of your information is correct. By following these steps, businesses can obtain financial assistance with statutory pay without incurring financial hardship, ensuring that employees receive their statutory payments.
Repaying Advance Payments
Once you have received advance money from HMRC, you must record all reclaimed statutory payments using an Employer Payment Summary (EPS) for each payroll period. Even if you receive statutory pay in advance, you must submit an EPS to ensure that your records are accurate.
How the HMRC Adjusts Advance Payments
After submitting your Full Payment Submission (FPS), you will know your complete PAYE liability for the month. If your statutory payments exceed that limit, HMRC will deduct the excess from the advance payment you received.
For example, if your PAYE liability is £2,500 and you reclaim £3,000 in financial assistance with statutory pay through your EPS. In this situation, HMRC will subtract the difference of £500 (£3,000 minus £2,500) from your advance balance.
What happens if you still owe HMRC?
If you have an outstanding sum at the end of the advance period, you must pay HMRC by the customary date. Late payments may result in penalties or other charges, so always keep your accounts up to date.
Advance Funding for Previous Tax Years
If you want financial assistance with statutory pay for a prior tax year but have not yet paid the employee, you can still seek financing from HMRC. However, this approach necessitates a written application rather than an online one.
How To Apply for Past-Year Funding
To ask for an advance payment for a preceding tax year, please send a request to:
HM Revenue and Customs
Corporate Treasury
BX9 1BG
What to Include in Your Request
Clearly clarify that you are seeking advance money for a statutory payment from a previous tax year. Your request should include the following:
- Your HMRC account information, including the Accounts Office reference and PAYE reference.
- The name and National Insurance number of the employee who will receive statutory payments.
- The employee’s start date (if TUPE applies, including the original employment start date).
- The specific dates covered by your claim.
- Any previous modifications to your PAYE payments.
- The total amount you can recoup.
- The particular amount required for advance funding.
Failure to include any of these facts may cause your request to be delayed.
What to Include in Your Application
When seeking financial assistance with statutory pay, HMRC wants precise information to process your application. To minimize delays or rejections, ensure that you supply all relevant details.
Important Employer Details
- PAYE reference number and Accounts Office reference (from your HMRC online account or employer registration letter).
- Your business’s start date (if under TUPE, use the original start date rather than the acquisition date).
- Your contact information, including complete name and phone number.
Employee Information
- An employee receiving statutory payments should provide their full name and National Insurance number.
- The employment start date (in TUPE cases, specify the date the employee first joined the company).
- The anticipated birth or adoption date (for maternity or adoption compensation).
- The exact birth or adoption date (for paternity pay).
- Whether the adoption is domestic or international.
- The date the mother or joint adopter returned to work if applying for Additional Statutory Paternity Pay.
Financial and Banking Details
- The total amount of statutory pay you’re requesting.
- Amount requested as advance funding.
- Bank account information for payment, including the Sort code and account name and number.
Submitting an incomplete application may delay your financial assistance with statutory pay, so double-check all facts before sending.
If Your Business Becomes Insolvent
If your firm becomes insolvent, HMRC may assume responsibility for making statutory payments to your employees. This ensures that employees continue to get their entitlements even if the company is unable to meet the commitment.
Who Should Notify HMRC?
In the event of insolvency, either you, your administrator, or your liquidator must notify HMRC immediately. Delaying this process can cause disruptions in employee payments and lead to additional issues.
Pregnant Employees and Unpaid Maternity Pay
If an employee is pregnant and has passed the qualifying week but has yet to receive Statutory Maternity Pay (SMP), HMRC will take over payments. This provides critical financial assistance through statutory pay, ensuring that the employee is not left without support.
Final Steps
Ensure that all parties involved, including employees and insolvency specialists, are informed of the procedure. By acting quickly, you may help ease the transition and preserve your employees’ financial well-being.
Conclusion
Navigating financial assistance with statutory pay can be difficult, but understanding your duties assures compliance and efficient payroll processes. Whether you’re returning an advance, seeking funds from prior tax years, or making a new claim, giving correct and complete information is critical. Employers should also be proactive in dealing with prospective insolvency situations to protect employees’ statutory payments.
Businesses can manage their payroll duties more efficiently by adhering to HMRC requirements, keeping detailed records, and acting quickly. If you want additional assistance, contacting HMRC early will help avoid financial hardship and keep employee rights on schedule.
