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

Statutory Sick Pay (SSP), Statutory Maternity Pay (SMP), Statutory Adoption Pay (SAP) and Statutory Paternity Pay (SPP) are benefits that count as pay for tax purposes.

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

• Include the payments with other pay on 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 local DWP office.

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.

Statutory payments paid by DWP

Exceptionally the DWP will make these payments. When this happens

• No tax will be deducted
• A certificate is provided by the DWP to both HMRC and the individual

When you receive a copy of the DWP certificate

• Only code out a payment made in the current year if some other coding adjustment is needed
• Ensure that if you code out a statutory payment you describe it as OE (Other Earnings). To avoid having it carried forward to the following year enter OE(amount)/0
• Set the POTA signal where

• Keep the HMRC copy of the DWP certificate in the main source or PAYE office until the end of year of review. If the taxpayer is not employed and not receiving taxable benefit, keep the certificate for review in the office of last employment