Sort out tax matters when an employee leaves

Statutory Maternity, Paternity and Adoption Pay

Statutory payments are taxable as normal earnings. 

• You are responsible for an employee's Statutory Maternity Pay (SMP), even if she leaves before the end of her maternity leave. To determine if you have to pay SMP to your employee, and if so how much, use the SMP calculator on the HM Revenue & Customs website. Note that if an employee is entitled to a backdated pay rise covering the period for which SMP is calculated, this must be reflected in their SMP. For instance, if employees have a pay rise agreed in July 2004 and the pay increase is effective from 1 April 2004, then for an employee whose SMP started 1 May 2004 the calculation period includes a pay rise from 1 May 2004. The pay rise must be within the period from the start to the end of maternity leave.
• If an employee is already getting Statutory Paternity Pay (SPP) when he leaves, you must continue paying for the time to which he is entitled.
• The same rule applies to Statutory Adoption Pay (SAP) payments made to employees claiming paid leave because they are adopting.

For more information, download the guide to pay and time off work for parents from the HM Revenue & Customs website (PDF).

You can also download the guide to pay and time off work for adoptive parents from the HM Revenue & Customs website (PDF).

Subjects covered in this guide

• Introduction
• What forms you need to fill in
• Standard payments
• Statutory Maternity, Paternity and Adoption Pay
• Taking account of student loan repayments
• Redundancy payments
• Employment tribunal awards
• Lump sum and non-cash payments

 

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