Introduction
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.
SMP rates
SMP 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: £172.48 or 90% of their AWE (whichever is lower)
Tax and National Insurance need to be deducted.
A company can offer more than the statutory amounts if you have a company maternity scheme. You must make sure your maternity leave and pay policies are clear and available to staff.
Eligibility
To be eligible for SMP, the employee must meet the following criteria –
- have an employment contract – it does not matter how long they’ve worked for you.
- have been continuously employed by you for at least 26 weeks up to any day in the qualifying week. Definition of the ‘qualifying week’ is the 15th week before the expected week of childbirth. If any employee only recently started working for the company, they will not be legible for SMP.
- give you the correct notice, which is 28 days before they want to start their SMP.
- give you proof they’re pregnant (MATB1 form).
- earn at least £123 a week (gross) in an 8-week ‘relevant period’. Definition of ‘relevant period’ is usually the 8 week period before the qualifying week.
Record keeping
You must keep records for HM Revenue and Customs (HMRC), including:
- proof of pregnancy – usually a doctor’s note or a MATB1 certificate (a photocopy is fine)
- the date SMP began.
- your SMP payments (including dates).
- the SMP you’ve reclaimed.
- any weeks you did not pay and why.
You must keep records for 3 years from the end of the tax year they relate to.
What you can reclaim from the government
You could reclaim 103% if your business paid £45,000 or less in Class 1 NI (ignoring any reductions like Employment Allowance) in the last complete tax year before making the claim for SMP. If your business paid more than £45,000 Class 1 NI, then you can reclaim up to 92%.
The way to claim the SMP reclaim is using your payroll software, including this claim in a monthly EPS submission to HMRC. The amount reclaimed will be used as a credit to lower your PAYE bill to HMRC. Therefore, on practical level, the company pays the employee their net salary each month, bit it’s not an expense to the company, as depending on the % reclaim, you pay HMRC less PAYE.
In a situation where the SMP reclaim is higher than your PAYE bill, then you will need to apply to HMRC for upfront payment of the SMP amounts.
