Reply to: Accountant wanted for opinion on SMP

[northernladuk]

How about the accountant that gave you detailed advice the last time you posted something similar?

http://forums.contractoruk.com/accou...ml#post1526479

Very good young padawan!! Now just to tell the OP to get herself and accountant and ask them in future rather relying on free advice on a public forum.

[Jessica@WhiteFieldTax]

Probably not worth it

Alas, its a nice idea but probably not worth it.

I've just done some quick figures. I've assumed you are currently on a salary of £8k and you were thinking of increasing to £40k by bonus.

Your SMP is 6 weeks at 90% of average pay, then 33 weeks at lower of £135.45 or 90% of average weekly pay. Average weekly pay comes from the previous 8 weeks. Theres little to choose over a one off bonus, or increasing the salary over those 8 weeks.

A small business (paying less than £45k pa of NICs over to HMRC) can claim back 103% of the SMP.

Superfically then its attractive to increase salary and get more SMP back - in practice it only impacts on the first 6 weeks - after that the £135.45 floor cuts in in most cases.

On the figures above, on £40k you could increase the SMP to £4,153 for the first six weeks (£40k/52 x 90%). You claim £4,278 back from HMRC (£4,153 @ 103%).

On £8k, the SMP for those 6 weeks would be £830 (£8k/52 x 90%), and the recovery thus £855.

However, you need to factor in:

(a) Corporation Tax on the £3,422 extra SMP - that reduces it to £2,738

(b) Extra NI on the increased salary in the previous 8 weeks, and next 6 weeks - on £8k NIC would be negligible. On £40k over 8 weeks (bonus or salary), and then enhanced salary for 6 weeks the combined Employers and Employees NI would be £9,698(*1)

Therefore the NI negates the SMP recovered.

I've ignored Income Tax on salary, as its broadly the same as Corporation Tax saved.

You can juggle with different permutations of course, but the answers likely to be the same alas.

NB 1 rates and calcuations rounded in places
NB 2 12/13 rates


(*1) Extra payroll of £38,769 in 8 weeks (£40k less 9/52nds of £8k) plus extra payroll £3,323 in first 6 weeks (90% of 6/52nds of £40k pa less £8k pa). Total extra £42,092. NI at 13.8% employers and 12% employees, less Corporation tax saved on Employers = £5,808 + £5,051 less £1,162) = £9,698.

[captainham]

Dammit...musta been drinking from NLUK's cup and caught NLitis!

[captainham]

Hello

I am looking for an accountant with experience on SMP for a Company Director. I am about to go on maternity leave and need some advise in terms of paying myself a bonus to increase my SMP. My accountant can't help me.

thanks,
Michelle

How about the accountant that gave you detailed advice the last time you posted something similar?

http://forums.contractoruk.com/accou...ml#post1526479

[Podgy]

maternity site:forums.contractoruk.com/accounting-legal/ - Google Search

Could you tell me where to send my invoice please.

See - no point in having an accountant!

[northernladuk]

Funny - I got Pele and Erectile Dysfunction there - are CUK targeting me? I am 51 but I can maintain a good erection so I feel it rather unfair....

I have one now in fact....

Erm.. could you send me the URL please

[stek]

Funny - I got Pele and Erectile Dysfunction there - are CUK targeting me? I am 51 but I can maintain a good erection so I feel it rather unfair....

I have one now in fact....

Had one I should now say....

[stek]

Or InTouch .... They have a big orange banner at the top of my screen right how!

Funny - I got Pele and Erectile Dysfunction there - are CUK targeting me? I am 51 but I can maintain a good erection so I feel it rather unfair....

I have one now in fact....

[northernladuk]

Hi Michelle,

If your accountant doesn't know, have you asked to speak to their payroll department?

They would have to deal with this quite often, I would expect.

Not less than every 9 months for each client I hope!!

[northernladuk]

SJD or Nixon Williams - take your pick but you'll have to pay!

Or InTouch .... They have a big orange banner at the top of my screen right how!

[Nathan SJD Accountancy]

Hello

I am looking for an accountant with experience on SMP for a Company Director. I am about to go on maternity leave and need some advise in terms of paying myself a bonus to increase my SMP. My accountant can't help me.

thanks,
Michelle

Hi Michelle,

If your accountant doesn't know, have you asked to speak to their payroll department?

They would have to deal with this quite often, I would expect.

[northernladuk]

maternity site:forums.contractoruk.com/accounting-legal/ - Google Search

Could you tell me where to send my invoice please.

[captainham]

I hope you'll be withholding payment from your accountant in that case, if they can't help you on something like this.

[stek]

Hello

I am looking for an accountant with experience on SMP for a Company Director. I am about to go on maternity leave and need some advise in terms of paying myself a bonus to increase my SMP. My accountant can't help me.

thanks,
Michelle

SJD or Nixon Williams - take your pick but you'll have to pay!

[JamJarST]

Hello

I am looking for an accountant with experience on SMP for a Company Director. I am about to go on maternity leave and need some advise in terms of paying myself a bonus to increase my SMP. My accountant can't help me.

thanks,
Michelle

Why can't your accountant help?