PAYE72075 - PAYE operation: payments for PAYE purposes: statutory payments

The following payments count as earnings for tax purposes

• Statutory Sick Pay (SSP)
• Statutory Maternity Pay (SMP)
• Statutory Adoption Pay (SAP)
• Statutory Paternity Pay (SPP) (up to 2010-11)
• Ordinary Statutory Paternity Pay (OSPP) (from 2011-12)
• Additional Statutory Paternity Pay (ASPP) (from 2011-12)

An employer paying any of the statutory payments to an employee must 

• Include the payments with other pay on the deductions working sheet and operate PAYE on the total amount
• Include the payments on form P45 if the employee leaves the employment

If the employer makes this type of payment for an employee who has already left, the employer must 

• Write BR as the amended code on the employee's deductions working sheet
• Enter details of the payment and tax deducted at the basic rate

The employer must not issue an amended or additional P45.

If you receive any enquiries about statutory payments, refer the caller to the Employer Helpline.

Statutory payments paid by insolvency practitioner

The PAYE treatment of statutory payments is the same whether an employer or an insolvency practitioner (for example, a liquidator) pays it.

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Statutory payments paid by HMRC

Further information on when HMRC will make statutory payments can be found in Statutory Payments Manual SPM70205 and Statutory Payments Disputes Manual SPD17025. No tax will be deducted and HMRC will provide the individual with a certificate (SP712) and send a certificate (SC711) to the individual’s local tax office.

When you receive a copy of the certificate from the individual or on receipt of the form from the Statutory Payments Disputes Team (SPDT) you should

• Ensure that if you code out a statutory payment you describe it as ‘Other earnings’ and update income, allowances, benefits and deductions for CY+1 with zero ‘Other earnings’. (Refer to PAYE12041 for more information)
• Keep the HMRC copy of any certificate in the District Record folder until the end of year of review. If the individual is not employed and not receiving taxable benefit, keep the certificate for review in the District Record folder on behalf of the office of the last employment