enhanced maternity pay hmrc

Enhanced maternity pay. Q: "I work for a company who offer contractual maternity pay. The new regime will allow parents to share the statutory maternity leave and pay currently only available to mothers. Enhanced maternity pay Some employers offer enhanced maternity pay to attract and retain staff either as a contractual right or on a case-by-case basis. As of 14 September 2016 the following paragraph has been removed from the Employer Handbook "E18: how can you help your employees with childcare": "Childcare vouchers are an employer provided non . full pay for the first six weeks, half pay for the next ten weeks, SMP for the remaining 23 weeks make a bonus payment on the employee's return to wor You must pay eligible employees the lower of: the standard weekly rate - 156.66 90 per cent of their average weekly earnings You can recover some or all of your SPP payments from HM Revenue & Customs (HMRC) - the proportion you can recover depends on the size of your annual NICs liability. Once the money is paid back we would then have to complete balance adjustments and report to HMRC. Alternatively, 45.9% of businesses offered financial benefits to those returning from maternity leave, such as a bonus. Enhanced Maternity Pay or Maternity Allowance Monthly net amount after deductions The SMP Rates for 2020-2021 are: First six weeks: 90% of your average weekly earnings The next 33 weeks: 151.20 per week or 90% of your average weekly earnings (whichever is less) For example, the employer could pay full pay for eight weeks and then drop down to the statutory minimum rate. The best way to determine staff AWE is to take all earnings paid in the relevant period and divide the earnings by the number of weeks in that period. Statutory maternity pay is: 90% of your average weekly earnings (before tax) for the first 6 weeks *156.66 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks https://www.gov.uk/maternity-pay-leave/pay Statutory paternity pay is the same 156.66/90% rate as the mother gets after the first 6 weeks. Type 2: those which pay the employee a percentage of the . Regulation 9 of the Maternity and Parental Leave Regulations 1999 (the Regulations) provides that during ordinary maternity leave and additional maternity leave, an employee is entitled to all the usual benefits of her employment, except her remuneration, which is replaced by statutory maternity pay (SMP), or contractual maternity pay. To start calculating your maternity pay entitlement, the first step is to work out your expected week of childbirth and your qualifying week. (52 weeks) will be required to repay the difference between the enhanced rate of maternity pay that they have received and the minimum level of maternity pay, SMP, to which they would otherwise have been entitled. Enhanced maternity pay If you wish, you can offer enhanced maternity pay arrangements to attract and retain employees. To work out how much ShPP you're entitled to, you can use the Shared Parental Leave and Pay planning tool on GOV.UK. They may pay more than statutory maternity pay for a fixed period. For those who are unaware, The Alabaster Case was heard over a period of nine years . The first 26 weeks are Ordinary Maternity Pay, and the second 26 weeks are Additional Maternity Pay. With the increase in pay due to the rise in the National Minimum Wage and the National Living Wage on the 1 st April 2018, there are instances where the principles of the Alabaster case may needed to have been applied. You may be able to keep receiving childcare vouchers whilst you are on maternity leave, if a deduction can be made by way of salary sacrifice from any enhanced maternity pay you receive, over and above the statutory amount or from any payment you receive for 'Keeping in touch' days. For detailed information on other aspects of pregnancy and maternity leave, see Practice note, Pregnancy and maternity leave: the legal framework. . There are three main forms that the EMP takes: If an employer applies a pay increase (this includes NMW uplifts) during the 'alabaster window', then the 6 weeks of maternity pay at 90% of average weekly earnings (AWE) needs to be recalculated and the difference paid to the employee. Enhanced maternity pay policies tend to fall into two categories: Type 1: those which calculate enhanced maternity pay in the same way as SMP (by assessing the employee's average earnings prior to the start of maternity leave) and pay the employee a percentage of those average earnings for [x] weeks/months during maternity leave; and. This policy applies to all employees and is non-contractual. Qualifying rules Entitlement Employees don't have to take 52 weeks of Maternity Leave. A 1% pay award is then applied from a date between the start of the relevant period and the end of the employee's MPP. The new system will also apply to adoptions where the adoption matching or placement date is on . To apply online, you need a Government. Where this occurs, must they also pay enhanced pay rates during shared parental leave (SPL)? Read more on statutory pay and leave. The consequence of this is that the company does not have to pay your statutory redundancy payment until your employment then terminates i.e. It cannot be less than SMP. If you cannot afford to make payments What you can reclaim As an employer, you can usually reclaim 92% of employees' Statutory Maternity ( SMP ), Paternity, Adoption, Parental Bereavement and. Statutory rates Statutory maternity pay (SMP) is paid for up to 39 weeks. If your business does not offer enhanced maternity pay, it must pay Statutory Maternity Pay (SMP). They may pay full pay for the first six weeks, half pay for the following 10 weeks and maternity pay for the remaining 23 weeks. The Alabaster Rule. For example, you might get 26 weeks of full pay followed by 13 weeks of SMP. Maternity Leave and Pay: Policy 3 4.3 Statutory Maternity Pay 4.3.1 Statutory Maternity Pay Statutory Maternity Pay is paid to employees alongside University Maternity Pay for a period of 39 weeks as follows: Weeks 1 to 6 The higher of the current flat rate or 90% of average weekly earnings. This in turn fosters loyalty to the company and helps retain working parents, and those who are . It's true that you will need to recruit or reorganise to cover an employee's maternity leave, but there's less to fear from maternity pay than many realise. The next 33 weeks: 145.18 per week, or 90% of your employee's average weekly earnings (whichever is lower) Use Croner's free maternity pay calculator to work out SMP for you or your staff. The effect on SMP. Statutory Maternity Pay Add a Statutory Maternity Leave Download a Payment record PDF Eligibility All pregnant employees, regardless of length of service, are entitled to 52 weeks' maternity leave, consisting of 26. An optional remuneration regime was introduced in 2017 which restricts the benefits that attract tax and NICs advantages when provided as part of an optional remuneration (including salary sacrifice) arrangement. HMRC change regarding Childcare Vouchers during Statutory Maternity Leave HMRC have recently revised their guidance regarding the payment of Childcare Vouchers during Statutory Maternity Leave. In terms of the amount both you and your employer contribute during maternity leave, your employer should pay the amount that you were receiving before you went on maternity leave. Offer enhanced Shared Parental Pay at the same level as enhanced maternity pay; Encourage take up of Shared Parental Leave (see our Shared Parental Leave guidance (opens in a new window)). Employers offering enhanced contractual maternity pay to mothers are not guilty of direct or indirect discrimination or of breaching equal pay rules, if they fail to give enhanced pay to fathers taking . This will replace the existing provisions on additional paternity leave (APL) and will apply to babies due on or after 5 April 2015. Paid maternity or paternity leave signals a flexible attitude to the challenges of life outside of work, and has shown to boost a parent's feeling of goodwill towards their employer, particularly if pay is enhanced during parental leave time. Some employers voluntarily pay their employees enhanced rates of maternity pay under the terms of the employment contract. Check the maternity benefits you're entitled to & how much SMP, Enhanced Maternity Pay, Maternity Allowance & Child Benefit you'll get each month after tax. Choose the option " Allocate Statutory Maternity Pay " and click " Next " Step 1 Setup or Calculate Select "Calculate" and click "Next" Step 2 Calculate the Maternity Payment this Month Edit the " Date returned to work " if required and click " Calculate the Maternity Payments for this employee this month " Step 3 - Maternity Payments this month However, you only need to pay pension contributions based on your actual earnings at the time, including any SMP or any top-up pay from your employer. tools. check if you're eligible for maternity leave & pay. During the next 33 weeks of maternity leave Pay whichever of these is lower: 156.66 90% of their average weekly earnings (before tax) Enhanced maternity pay. An employee eligible for the enhanced package has to provide a written commitment that they will return to work for at least 12 months after maternity leave. During the first 6 weeks of maternity leave Pay them 90% of their average weekly earnings (before tax). What is enhanced maternity pay (EMP)? For example, you could: pay more than SMP over a certain period, e.g. Statutory Shared Parental Pay (ShPP) is either of the following, whichever is lower: 156.66 a week 90% of the employee's average weekly earnings The rate is usually reviewed every year. Checking eligibility for Shared Parental Pay If the employee was only in receipt of basic pay during the eight-week reference . potentially December 2010. If the maternity enhanced pay was last tax year we would be asked by HR to work out how much NET you have to pay back. As per Paul's helpful link, the amount that can be claimed can be either 92% or 103% of the SMP value - depending on the Class 1 NICs paid by the employer in the last complete tax year. SPM200100 - Change in circumstances - Keeping in Touch (KIT) days Employees can work for up to 10 KIT days during the maternity/adoption and additional paternity pay period (MPP/APP) without it. The percentage of private sector organisations offering EMP was 65.5% in 2021 but new data from February 2022 shows this has increased to 74.1%. This is the most important figure in working out your employees' maternity pay rates. You might only give an additional 10 per week in occupational maternity pay. Part-time workers are entitled to the pro-rata equivalent. Statutory Maternity Leave is 52 weeks. Should you need to discuss your case with HMRC, you can contact its Payment Dispute Team on 0300 322 9422. Published. The Employment Rights Act provides that a woman is entitled to all her terms and conditions during both ordinary and additional maternity leave (OML and AML), apart from remuneration, as though. Check if you can . The most common option for employers is to offer full pay for the first six weeks or more when the employee takes maternity leave, instead of 90% of their average weekly earnings (before tax) for the first six weeks. It looks like you're new here. From: HM Revenue & Customs. For employees: Maternity pay and leave. Statutory Maternity Pay is payable for up to 39 weeks. You can also find information from GOV.UK. 1. Pay and reward Childcare Over half of UK employers now provide enhanced maternity and paternity pay Published: 24 May 2021 Nearly two thirds (63.5%) of businesses offer maternity pay above the statuary minimum in the UK, and three-fifths (60.8%) offer enhanced paternity pay. In order for an employee to qualify for SMP, they must earn on average at least 118 a week, give correct notice, provide proof of pregnancy (if you need it) and have worked for you continuously for at least 26 weeks continuing into the 'qualifying week' - the 15th week before the expected week of childbirth. Enhanced maternity pay and shared parental pay Some employers give their employees enhanced rates of maternity pay for part or all of their maternity leave period. 156.66 90 per cent of their AWE You can recover some or all of your SMP payments from HMRC - the proportion you can recover depends on the size of your annual NICs liability. HTH @Crispycremedelight (great username) that's really helpful to know, thank you! Enhanced Maternity Pay is offered by almost two thirds of UK Organisations. 17 April 2015. The only benefits that can be provided tax efficiently via salary sacrifice arrangements are: We've gathered together everything you need to help you understand the qualifying rules and entitlement, as well as how to record it. A practice note dealing with pay and benefits during maternity leave, including statutory maternity pay (SMP), contractual maternity pay, pay rises, bonuses, pensions and other contractual entitlements. To apply for an advance of statutory parental, paternal, adoption or maternity pay, you can use the online service to apply for all types of advance. If they earn 120 on average per week or more in the tax year, they are eligible for statutory maternity pay. Statutory maternity pay (SMP) You can easily process statutory maternity pay (SMP) by using Payroll to automatically calculate it for you. Some employers offer enhanced ('contractual') maternity pay that's more than SMP. Your employer pays your SMP in the same way as your salary is paid. Those who fail to return at the end of their maternity leave period. If you take the full 52 weeks' maternity leave, the last 13 weeks are unpaid unless your contract offers enhanced maternity pay. This has the effect of increasing earnings for each payment in the relevant period by 21.62. Overview. These weeks always begins on a Sunday and end on a Saturday. Alternatively, after the first six weeks, they may make a weekly payment which exceeds the statutory . Your expected week of childbirth is the week of your estimated due date. You can also receive childcare vouchers as a salary . You can claim Maternity Allowance as soon as you . HMRC has launched new online tools to help parents understand their eligibility for shared parental leave (SPL) and plan how to use it. Maternity Allowance is a payment you can get when you take time off to have a baby. Returns, forms & HMRC admin . This minimum 5.6 week entitlement amounts to 28 days. Are they still able to claim SMP from HMRC?" A: Yes. Enhanced maternity pay If you wish, you can offer enhanced maternity pay arrangements to attract and retain employees. In the event that they do not complete the 12 months, for any reason, then the company can ask the employee to repay the enhanced element of the maternity pay. Your average pay is based on your earnings when you are approximately 18 to 26 weeks' pregnant. Statutory maternity pay disputes are ultimately resolved by HMRC's Statutory Payment Dispute Team, but it is recommended that you try to resolve the issue with your employer first," he explains. calculate your maternity leave take-home pay . Shared Parental Leave and Pay enables working parents to share up to 50 weeks of leave and up to 37 weeks of pay in their child's first year. You can get Maternity Allowance for up to 39 weeks. The first six weeks: 90% of your employee's average weekly earnings before tax. Your employment then terminates i.e you can offer enhanced maternity pay rates those which pay employee. They are eligible for maternity leave and pay currently only available to.. A bonus a percentage of the salary is paid back we would then have to pay your statutory redundancy until... 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