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SMP and Umbrella Companies

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    SMP and Umbrella Companies

    Hi there,

    Got a technical query on Umbrella companies and payment of SMP.

    On a standard working week any wage payment is subject to a deduction of Tax together with Employee and Employer NI. When SMP is paid is the calculation the same for these statutory deductions or would the SMP be grossed up to account for the Employer NI element?

    Should there also be an expectation of the "processing fee" when the SMP is paid?

    Any advice on this will be most appreciated.

    #2
    Originally posted by bass1999 View Post
    Hi there,

    Got a technical query on Umbrella companies and payment of SMP.

    On a standard working week any wage payment is subject to a deduction of Tax together with Employee and Employer NI. When SMP is paid is the calculation the same for these statutory deductions or would the SMP be grossed up to account for the Employer NI element?

    Should there also be an expectation of the "processing fee" when the SMP is paid?

    Any advice on this will be most appreciated.
    Statutory Maternity Pay is subject to tax and National Insurance as per your regular weekly wage and should equate to 90 per cent of your average earnings for the first 6 weeks, then 33 weeks at the SMP rate of £124.88.

    If I understand what you mean by 'processing fee' to be the fee you pay your umbrella to manage your payments (?) then this should not be expected when SMP is paid. The processing fee should only come into effect when you are submitting timesheets for work you have done to be processed. Anybody on maternity leave would not be doing so.

    Hope that helps.

    Comment


      #3
      Originally posted by Steven@Parasol View Post
      Statutory Maternity Pay is subject to tax and National Insurance as per your regular weekly wage and should equate to 90 per cent of your average earnings for the first 6 weeks, then 33 weeks at the SMP rate of £124.88.

      If I understand what you mean by 'processing fee' to be the fee you pay your umbrella to manage your payments (?) then this should not be expected when SMP is paid. The processing fee should only come into effect when you are submitting timesheets for work you have done to be processed. Anybody on maternity leave would not be doing so.

      Hope that helps.
      Thanks Steven. I understand the rules surrounding SMP but cannot get my head around if the payment is subject to the usual Employer/Employee National Insurance and Tax Deduction. When I queried this the company was a little vague on the subject.

      It is a statutory payment so would it be right to assume that is the minimum gross amount and that this payment would have to be grossed up by the ER NI liability?

      Comment


        #4
        Originally posted by bass1999 View Post
        Thanks Steven. I understand the rules surrounding SMP but cannot get my head around if the payment is subject to the usual Employer/Employee National Insurance and Tax Deduction. When I queried this the company was a little vague on the subject.

        It is a statutory payment so would it be right to assume that is the minimum gross amount and that this payment would have to be grossed up by the ER NI liability?
        I can only speak from the point of view of what we do and that is deduct the tax and NI as we would any payment to an employee as usual.

        We then take the hit and pay the employers NI. I'm not sure if this is standard practice for other umbrellas though I'm afraid.

        Does that help? Feel free to email me direct at the address on my profile if I'm misunderstanding your question.

        Comment


          #5
          I think it must be standard practice because I spoke with Gabem and they also take the hit for Employers NI.

          Comment

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