HM Treasury have recently consulted on an area of Statutory Payment policy which will impact payroll software.
Employers can currently reclaim 92% of employees’ Statutory Maternity, Statutory Paternity, Statutory Adoption, Statutory Parental Bereavement and Statutory Shared Parental Pay. If a business has paid £45,000 or less in Class 1 National Insurance (ignoring any reductions like Employment Allowance) in the last complete tax year they can qualify for Small Employers Relief, and reclaim 100% of the Statutory Payment, and an additional 3% compensation.
From 6 April 2025, the rate of compensation will increase from 3% to 8.5%. Employers who qualify for Small Employers Relief will therefore be able to reclaim 108.5% from HMRC.
The new 8.5% compensation rate will apply to the following Statutory Payments:
- Statutory Maternity Pay
- Statutory Paternity Pay
- Statutory Adoption Pay
- Shared Parental Pay
- Statutory Parental Bereavement Pay
- Statutory Neonatal Care Pay
The Small Employers Relief threshold will remain at £45,000.
IReeN 28/1/2025
IReeN the electronic exchange with government user network 