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HMRC internal manual

Employment Income Manual

Social security benefits: statutory paternity pay: summary

Part 10 Chapter 3 ITEPA 2003

Statutory Paternity Pay (SPP) is intended to help employees take time off work to be with their new family by providing a measure of earnings replacement. The first employees to qualify will be those whose babies are due on or after 6 April 2003. Employers are responsible for administering the scheme and paying their employees the amount to which they are entitled. HMRC is responsible for ensuring that employers correctly administer the scheme and for providing employers with the funding to which they are entitled.

The definition of an employee for SPP is exactly the same as the definition for SMP. To qualify for SPP an employee must:

  • have a prescribed relationship with the child and the child’s mother
  • stop working for, or take leave from, the employer for the purpose of caring for the child or supporting the mother
  • have been continuously employed: * for at least 26 weeks continuing into the 15th week before the week the baby is due, the “qualifying week” and * from the end of the qualifying week to the date of birth

  • have average weekly earnings of not less than the lower earnings limit for National Insurance purposes that applies at the end of the qualifying week
  • give the employer notice of the date from which the liability to pay SPP is expected to begin at least 28 days beforehand or as soon as is reasonably practical. 

Any enquiries about entitlement to SPP should be dealt with initially at the local HMRC office or by the Employers’ Helpline. If an employee is disputing his or her employer’s decision about entitlement to SPP or the amount being paid, he or she should be referred to the Statutory Payments Dispute Team in Nottingham.

SPP is taxable

SPP is not a social security benefit but replacement earnings, chargeable to tax as employment income. An employer is still required to pay SPP even if the employment ceases. In exceptional circumstances, HMRC pays SPP direct to the claimant, but without operating PAYE (EP1015 tells you how to deal with these cases).

National Insurance contributions are payable on SPP.

How employers recover the cost of SPP

The SPP legislation allows the employer to recover the cost of paying SPP by deducting 90% of the amount from the National Insurance contributions and income tax payments due under the PAYE system. Small employers may deduct 100% of the SMP paid plus a set percentage as compensation (Small Employers Relief). If necessary they can also apply for advance funding.

Use of the abbreviation SPP

The abbreviation SPP is used in DTI literature and certain HMRC guides and forms. You can use this abbreviation when dealing with employers, collectors and other tax offices.