MATERNITY LEAVE AND PAY

I must admit that for most of my career to date I didn’t really think much about maternity leave and pay.  While training to be an accountant, just getting on with the job (apologies if that sounded a little like Theresa May!), it wasn’t really on my radar.  There did however come a point when I started thinking about it and realised that I didn’t really know anything about it, so here’s the basics:

Who is entitled to maternity leave?

 Any employee with an employment contract is entitled to maternity leave, no matter how long they have worked for their employer, as long as they give notice of the date they want to start their maternity leave at least 15 weeks before the baby is due.

How long is maternity leave?

Maternity leave is split into ‘Ordinary Maternity Leave’ and ‘Additional Maternity Leave’ which total 52 weeks.

All new mothers must take at least 2 weeks off after childbirth (or 4 weeks if they are a factory worker) but do not have to take the full 52 weeks.

 When does maternity leave start?

If there are no complications with the pregnancy, the employee can choose when to start maternity leave, but the earliest it can be started is 11 weeks before the expected week of childbirth (EWC).  If the baby is born early, leave starts the following day; it will also start automatically if the employee is off work for pregnancy-related illness in the 4 weeks before the EWC.

What about maternity pay?  Who is entitled to that?

To be entitled to Statutory Maternity Pay, the employee must be on the payroll in the ‘qualifying week’ (the 15th week before the EWC) and have worked for that employer for at least 26 weeks before that week.  In addition, they must provide proof of their pregnancy (a MATB1 form usually obtained from their midwife around the midpoint of the pregnancy) and earn at least £113 per week (gross) in the 8 weeks before the qualifying week.

Therefore not all those that are entitled to maternity leave will get maternity pay from their employer, but they may be able to get Maternity Allowance from the government instead. 

How much is maternity pay?

Statutory maternity pay is payable for up to 39 weeks as follows:

  • The first 6 weeks: 90% of the gross average weekly earnings (AWE)
  • The remaining (up to) 33 weeks: £140.98 or 90% of the AWE (whichever is lower)

So while maternity leave can be up to 52 weeks, statutory pay isn’t for that whole time.

Maternity pay is paid in the same way as wages, with tax and national insurance deducted.

Additional contractual maternity pay, over the minimum statutory amount, can also be paid and is common in some industries and the public sector (for example 6 months at full- or half-pay).

What about Dads?

As a Mum-to-be myself I have focused this blog on maternity aspects, but Dads have an entitlement too!  Dads are entitled to up to 2 consecutive weeks of leave but it can’t start before the birth and must finish within 56 days of the birth (or due date if the baby is early).  Statutory Paternity Pay (SPP) is paid at the lower of £140.98 per week or 90% of average weekly earnings.

Alternatively, a couple may choose “Shared Parental Leave” – our Payroll Manager, Becky Edwards wrote a blog earlier in the year specifically on this subject please click here to read this. 

Unpaid Parental Leave

 Many people don’t know that this exists!  Parents who have been with their employer for over a year can take unpaid time off to look after their child’s welfare, for example to spend more time with the child, settle them into nursery or look into schools.  It is available for a total of up 18 weeks per child, up to their 18th birthday.  It must be taken in whole weeks, at a maximum of 4 weeks at a time, unless the employer agrees otherwise.

Unpaid parental leave can be taken at any time (subject to giving 21 days notice) right from the birth of the child, so can be used in conjunction with maternity, paternity or shared parental leave.

The Employer Perspective

 Employment rights continue while an employee is on maternity leave, for example the right to employer pension contributions, returning to a job and paid holiday (which accrues while on maternity leave at the employee’s number of days worked prior to leave, even if they come back to work part-time).

You can reclaim at least 92% of SMP/SPP paid to employees – this increases to 103% if you qualify as a Small Employer (if you paid less than £45,000 in Class 1 National Insurance in the previous tax year).  The reclaim should be calculated by your payroll software and deducted from your PAYE/NI liability for the tax month, however if you can’t offset it in full you can ask for a repayment, but not until the start of the next tax year.

 Katie Kettle

Technical Manager (and Mum-to-be)Katie Kettle Colour

Extending your PAYE payment deadline the easy way

We all know it is very important to pay your taxes to HMRC by their deadlines to avoid any late payment interest and penalties.

The statutory deadline for paying Employers PAYE liability is the 22nd of the month – or the 19th if paying by cheque through the post.

Different ways to pay your PAYE include:

  • By Debit or credit card online
  • BACS
  • At your bank or building society (cash or cheque)
  • At the post office (debit card, cash or cheque)
  • Direct Debit
  • By Cheque through the post

HMRC’s preferred option is that you make your payments online as this saves them money and hence saves you, as the tax-payer, money as well.

For employers, the advantage of paying with online banking is that the deadline extends by 3 days to the 22nd. If your bank offers faster payments this means you can pay on a Saturday/Sunday if the 22nd falls on the weekend.

Whereas, if you pay by BACS you would have to put the payment through 3 working days before the deadline for it to clear and paying by direct debit would mean having to pay it 5 working days before the deadline.

If you pay by posted cheque, the recommended time of posting is around the 12th of the month – 10 working days before the payment is due!

You can see the different payment deadlines in the diagram below: 

ZB Blog Image PM

PAYE Timeline 

To increase your payment deadline, paying by faster payments, CHAPS or personal banking will be the best option. Paying by cheque gives you the shortest deadline as you have to give it time to arrive with HMRC and for the payment to clear.

If you have a debit or credit card you can give us a call and we can pay your liability over the phone for you.

Alternatively, if we provide you with our payroll services, we can set up the direct debit PAYE payment for you when the payroll is processed so you have no worries about paying it yourself or making sure it is paid on time. For more information on any of the above or to pay your liabilities by card or direct debit please contact us on 0116 2423400.

Zahra Bates, Payroll Assistant 

National Insurance & Apprentices.

From 6 April 2016, HMRC have introduced a new relief which is designed to save Employers money if they employ Apprentices.

If you employ an apprentice you will not need to pay employer Class 1 national insurance contributions (NICs) on their earnings up to £827 a week (£43,000 per annum) which will obviously save you money.  To be eligible for this relief you should have evidence that the apprentice is under 25 years old and:

  • be following an approved UK government statutory apprenticeship scheme.
  • have a written agreement between you, the apprentice and a training provider, which meets the conditions incorporating a start date and an expected completion date.

Employees will continue to pay the standard rate of Class 1 NICs through their salary.  They won’t see any reduction in their payments.  It is employers who benefit from this change.

Do you:

  • Have existing employees under an apprenticeship?

Check the apprentice meets the conditions, ensure you have evidence to allow the relief and from 6th April 2016 adjust the employee’s NIC category to H. 

  • Have existing employees looking for training? Consider an apprenticeship

Firstly consider your business and what your needs are.  There are now over 200 types of apprenticeships across many sectors; apprenticeships are not just about learning traditional trades like plumbing or hairdressing.  There are apprenticeships in all types of work including areas like IT, business and finance and care work, with new roles being created all the time. 

The training provider will usually sort out all of the paperwork, so start by Finding a training organisation  which offers apprenticeships for your industry in your area – contact a relevant training provider and they will help you through the process including handling your apprentice’s training, qualification and assessment.  They will also see if you are eligible for a £1,500 apprenticeship grant.

  • Think you will be hiring someone new?

Hiring an apprentice is simple and now with employers benefiting financially from it, you should seriously consider it for your business when you look to recruit.  As for ‘existing employees looking for training’ above, the first step is to consider your business needs and then to find a training organisation.  They will be able to advise on the apprenticeship options available for when you recruit and may even be able to help you recruit a suitable candidate

The National Apprenticeship Service is holding National Apprenticeship Week from 14th to 18th March 2016 and is there to support employers and has made it easier than ever to employ an apprentice.  Their employer teams are on hand to guide you through the simple process of hiring an apprentice.  There has never been a better time to employ an apprentice.  For more information, visit the website at www.apprenticeships.org.uk or phone 08000 150 600.

Please contact us if you require further guidance or advice.

Becky Edwards , Payroll Manager 

Payroll A Timely Update

2013-14 Payroll Year End

Due to the introduction of RTI submissions this year the year end submission is more straightforward and therefore the deadline is now 19 April 2014. Please note that if your pay day is a Saturday then you will have a Week 53 for Saturday 5 April 2014 which must be processed before the year end is processed.

Don’t forget that if you suffer CIS tax from your customers, this should be shown on your RTI submissions.

If we process your payroll for you, we will take care of this.  If you process your own payroll using Sage or the HMRC Basic PAYE tools then you must do an additional submission for the year end.  Please contact me if you have any queries.

HMRC guidance notes: www.hmrc.gov.uk/payerti/end-of-year/tasks.htm

PAYE Penalties

HMRC have deferred the commencement of automatic penalties for RTI as follows:

  •        Employers who are late sending their ‘in year’ submissions won’t be charged late filing penalties as long as they bring themselves fully up to date by 5 October 2014.  (However a penalty will be raised if the above year end is not submitted by 19 May 2014 being one month after the deadline date.  This would amount to £100 per month late for up to 50 employees.)
  •        Employers who are late with their ‘in year’ payments won’t be charged automatic late payment penalties until April 2015. In the meantime HMRC will assess penalties to be applied after the tax year end and this will be based on the number of times the monthly payments have been made late.

In addition to current late payment penalties, daily interest will be charged on late ‘in year’ payments from April 2014.

It is important that you have systems in place NOW so that you don’t fall foul of penalties later in the year.

HMRC guidance notes: http://www.hmrc.gov.uk/payerti/reporting/late-reporting.htm

National Insurance – £2,000 employment allowance

From 6 April 2014 the Government will introduce an allowance of up to £2,000 per year for many employers to be offset against their employer Class 1 NIC liability. The legislation confirming the introduction of this allowance is contained in the National Insurance Contributions Bill 2013.

This allowance is limited to the amount of Employers Class 1 NIC that the employer pays. Please contact me if you have any questions concerning this.

HMRC guidance notes: www.hmrc.gov.uk/nicsemploymentallowance.

What do you actually pay accountants for? Let’s be honest…

 

It is very tempting when running your own business to save a bit of cash by sorting all of your own finances. It can’t be that hard, you think.

 

Add up sales here make deductions here, then work out the VAT, do your tax returns fill out the forms, arrange audits, calculate fixed asset, learn a new language, create world peace…

 

Ok so maybe not quite everything on the list is relevant to your business but think about all the time and energy you are putting in to working out your accounts. Think of all that time you are away from focusing on your clients and making important sales. What if your knowledge of finances is not as great as you thought it was and you end up paying more tax than necessary? There is potentially a huge lost to your business there, far greater than the cost of hiring an accountant.

 

So you start trying to find an accountant. You think ‘X accountants seem fine, I’ll go with them. After all, accountants all do the same job. Right?’ Well, yes and no. Accountants tend to have a standard list of services they offer but that does not mean that you should not be expecting more for your money.

 

The key difference between an average accountant and brilliant accountant wants you to make more profits and grow as a business. torr|Waterfield has gone to great measures to help business growth because we know it means you will want to work with us long term. Normal accountants won’t give you marketing tools or regular business health checks, what’s the point? You are already paying them to do a job. Why spend time on extra perks for an existing client when we could be spending time on getting new clients? It’s a tough world for businesses at the moment as we all know so by strengthening the businesses we work with, we ensure that we will have strong long term clients.

 

Simple as.

 

So when you are shopping round for an accountant, think about what you are getting for your money; a bog standard service or a company willing to invest its time into you?