PAYE21225 - employer records: maintain employer record: SAP and SPP

This subject is presented as follows

Background

Funding

Notice

Employer responsibilities

Employee responsibilities

End of year employer action

Payment

Processing returns

Background

In April 2003 there are a number of changes that will affect working parents. Two new schemes are being introduced

• Statutory Adoption Pay (SAP)

And

• Statutory Paternity Pay (SPP)

For those parents satisfying certain conditions payments will be made via their salary

• Conditions for SAP

Or

• Conditions for SPP

The employer can then claim back

• 92% of any payment made

Or

• 100% (plus compensation) if they qualify for Small Employers Relief (SER)

For 2003/4

• The compensation rate for payments made will be 4.5%

And

• The SER threshold will remain at £40,000

The weekly rate of SAP / SPP is the lesser of

• The standard rate (£100 for 2003/04)

Or

• The earning-related rate (90% of employee's average weekly earnings)

This payment is liable to deductions of

• Income Tax
• National Insurance Contributions

And

• Deductions that would be taken from the employee's normal wages, such as trade union subscriptions

SAP / SPP is not liable to deductions for

• Attachment of earnings orders (arrestment of earnings orders in Scotland)

Or

• Child Support Agency deductions from earnings orders

Entitlement to SAP / SPP does not affect the employee's entitlement to contractual paternity pay or other remuneration. An employer may offset liabilities of SAP / SPP and other earnings.

HMRC is responsible for ensuring that employers correctly administer the scheme and for providing employers with the correct amount of funding.

Funding

Employers are expected to use the PAYE tax, NICs, Student Loan deductions and Construction Industry Scheme deductions to make the payments. If they do not have enough they will also be able to apply for funding to make these payments retrospectively or in advance. To make a claim the employer must contact their relevant Banking Operations office

If the employer needs help they can call the Employer Helpline

• Tel 0845 7143143

Notice

Notice does not have to be in writing unless requested by the employer.

It will normally be given in person, but an employer must accept notice given on behalf of the employee.

If notice is given by post it is treated as given on the day on which it is posted.

Employer responsibilities

The employer is responsible for

• Administering the scheme and keeping records of

• Paying their employees what they are entitled to

• Paying SAP / SPP to a former employee except in weeks where employed by a new employer

An employer must not

• Make any agreement to exclude or limit or change the employee's statutory entitlement
• Require an employee or former employee to

The employer will record the amount of SAP / SPP paid on the form P11 or equivalent

• Form SAP2 record sheet is also available to employers to record payments of SAP if required

Four new Help books are available to order from the Orderline to assist employers

• Help Book E15 'Pay and time off work for parents'
• Help Book E15 Supplement 'Pay and time off work for parents special cases'
• Help Book E16 'Pay and time off work for adoptive parents'

And

• Help Book E16 Supplement 'Pay and time off work for adoptive parents special cases'

This guidance is also available on the Internet and Employer CD-ROM.

Employee responsibilities

The employee must tell their employer the date from which they wish to be paid, and provide

For SAP

• Evidence for SAP from the adoption agency including the date on which the child is expected to be placed with them

For SPP

• The expected date of childbirth
• Whether they intend to take 1 or 2 weeks off work
• Evidence for SPP which may (not necessarily) be on SC3

For both

• They must inform a former employer who is still paying SAP / SPP to them any dates on which they work for a new employer

The employee must give notice at least 28 days before they expect their entitlement to SAP / SPP to begin, or, if this is not reasonably practicable, as soon as possible.

If the employee is late in giving notice, the employer must decide if the delay is reasonable based on the employee's circumstances.

If they think the delay was unreasonable, the employer can refuse to pay SAP / SPP at all but must tell the employee their reason(s) and may be required to provide a written statement on request. The employee may then request HMRC to make a decision on their entitlement.

End of year employer action

The employer will at the tax year end

• Add up the amounts of SAP / SPP paid shown on form P11 and record these on forms P14 and P60 or equivalent
• Calculate the total SAP / SPP recovery and NI compensation and record these on form P35 or equivalent

Payment

SAP / SPP and adoption / paternity leave must

• Be taken in a single period
• Not be split
• Not be taken as odd days

The maximum amount of time SAP can be paid for is 26 weeks (any period of 7 days)

SPP can be paid for one and two weeks.

SAP / SPP is not payable by the employer for any week

• In which the employee works
• In which the employee receives Statutory Sick Pay
• After the week that the employee dies
• After the employee is taken into custody

Processing returns

The amounts entered on the annual return for the following as with all other monetary entries on a return, will be entered onto the Employer Business Service (EBS) by using Function CAPTURE EOY RETURN DETAILS

• SAP / SPP paid
• SAP / SPP recovered

And

• NI compensation

All monetary fields using this function require entries to be input twice.