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Your employee may be entitled to Statutory Adoption Pay (SAP) if they adopt a child. It replaces their normal earnings to help them take time off around the time that the child is placed with them.
Whether you'll have to pay them SAP depends on how long they've worked for you, how much they earn and when the child was placed for adoption. They'll also have to provide you with evidence of matching and give you notice of when they want you to start paying their SAP.
Payments of SAP count as earnings. You must deduct tax and National Insurance contributions (NICs) from them in the usual way.
You'll normally be able to recover some or all of the amounts you have to pay out as SAP.
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If your employee is entitled to adoption leave and SAP, you'll have to:
If your employee is a member of a couple adopting a child together:
Most employees who are entitled to adoption leave will also be entitled to SAP. To qualify employees must:
If your employee is entitled to SAP, the amount you'll have to pay during the first 39 weeks of their adoption leave is the lower of:
You'll be able to recover at least 92 per cent of the SAP you have to pay. If your total National Insurance payments are £45,000 a year or less, you are entitled to recover 100 per cent and an additional amount of 4.5 per cent of the SAP you have to pay. This is to compensate you for the employer's National Insurance contributions (NICs) you have to pay on the SAP.
You can recover SAP by deducting it from your monthly PAYE payments. Or you can ask HM Revenue & Customs (HMRC) for funding in advance.
If your employee isn't entitled to SAP, they may be entitled to other financial support from their local authority or from the Department for Work and Pensions.
Get help with statutory payments funding
Statutory Paternity Pay: an overview
HMRC's guide on dealing with calculating and recovering SAP explains in detail how to calculate, pay and recover SAP. There's a link to it at the end of this section.
If you use commercial payroll software, it will help you decide if SAP is due and do most of the calculations for you. Or you can use HMRC's free SAP calculator on their website or your Employer CD-ROM. This will:
Calculating and recovering SAP
Your employee must give you documentary evidence to show that they're adopting a child through an adoption agency. This can be a letter from the agency confirming that your employee or the adopter has been matched with a child, or a matching certificate.
The evidence your employee gives you must show:
You mustn't pay SAP without this evidence. If you have any concerns about the evidence your employee gives you, you can get advice by calling HMRC's Employer Helpline - you'll find a link to their contact details at the end of this guide.
There are various forms that you'll need to use for dealing with SAP - SAP1, SAP2, SC4 and SC6. You can use your own forms instead of these, but they must include the same information and declarations. You can get copies of all HMRC adoption forms by:
Complete the employer online order form
If you determine that your employee isn't entitled to be paid SAP, you must tell them about your decision. You can do this using form SAP1.
Go to form SAP1 Why I cannot pay you SAP
You'll need to keep a record of SAP. You can use this form for keeping your record.
Go to form SAP2 Statutory Adoption Pay Record Sheet
You should use this form to tell your employee about the terms and conditions for SAP. It includes a tear-off statement for your employee to tell you about dates and leave.
The statement includes a declaration for your employee to sign. This confirms that they:
You can allow paternity leave without a signed statement but you mustn't pay SAP without it.
Go to form SC4 Becoming an adoptive parent
You should use this form to tell your employee the terms and conditions for SAP when they're adopting the child jointly with their partner. It includes a declaration they must sign to say that they don't want to receive paternity leave and SPP. Your employee should give this to you as part of the evidence you'll need before you can pay SAP.
Form SC6 SAP and Adoption Leave when adopting from abroad
The records you'll need to keep include:
As well as recording payments on form SAP2, you must also use the following to keep records of the payments of SAP you make and the amounts you recover:
Remember that almost all employers are required to file their Employer Annual Return (form P35 and forms P14) online to HMRC. For more information, including details of the exemptions that apply, follow the link at the end of this section.
If you use the Simplified Deduction Scheme for domestic employees there are different forms to use:
You must keep all these records for at least three years after the end of the tax year they relate to.
You can find out more about the forms you'll need for dealing with SAP and about using your own forms in HMRC's publication E16, 'Employer Helpbook for Statutory Adoption Pay'. You'll also find information on record keeping.
Download E16, 'Employer Helpbook for Statutory Adoption Pay' (PDF 201K)
Payroll calculations and records: an introduction
Filing your Employer Annual Return online: P35 and P14s
Simplified PAYE for domestic employees
You may determine that your employee isn't entitled to SAP. You must explain the reason for your decision to your employee. You can do this using form SAP1. Make a copy of the evidence from the adoption agency that your employee gave you and give the original back to your employee with form SAP1.
If your employee doesn't agree with you, they have the right to ask you for a written statement showing:
Your employee can ask for a written statement at any time. If the request is reasonable you must give them the statement within a reasonable time - for example, within seven days of being asked for it.
If you and your employee can't agree how much SAP you should pay you can ask HMRC for guidance by calling the Employer Helpline - you'll find a link to their contact details in 'Help and advice' below. Your employee can also ask HMRC for a decision if you can't agree.
Go to form SAP1 Why I cannot pay you SAP
You can find quick answers to the most commonly asked questions about SAP by following the link below.
Quick answers to common questions on SAP
If you still can't find what you need, you can ask a question through HMRC's email query service.
Use the SAP email query service
Alternatively you get advice from HMRC's Employer Helpline.
Find contact details for HMRC's Employer Helpline
You'll find detailed guidance on SAP in E16, 'Employer Helpbook for Statutory Adoption Pay'.
Download E16, 'Employer Helpbook for Statutory Adoption Pay' (PDF 201K)
There's an interactive tool on the Business Link website that can help you make the right decisions about what leave, pay and other benefits your employee is entitled to and your obligations regarding their return to work. By answering a few simple questions, you'll get a clear idea of your responsibilities and some best practice guidance.
