Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
, see all updates

PAYE operation: payments for PAYE purposes: statutory payments

The following payments count as earnings for tax purposes

  • Statutory Sick Pay (SSP)
  • Statutory Maternity Pay (SMP)
  • Statutory Adoption Pay (SAP)
  • Statutory Paternity Pay (SPP) (up to 2010-11 and from 2015-2016)
  • Ordinary Statutory Paternity Pay (OSPP) (from 2011-12 up to 2014-2015)
  • Additional Statutory Paternity Pay (ASPP) (from 2011-12 up to 2015-2016)
  • Statutory Shared Parental Pay (ShPP) (from 2015-2016)

An employer paying any of the statutory payments to an employee must

  • Include the payments with other pay on the deductions working sheet and operate PAYE on the total amount
  • Include the payments on form P45 if the employee leaves the employment

If the employer makes this type of payment for an employee who has already left, the employer must

  • Record 0T W1/M1 as the amended code on the employee’s RT11 or pay record where the employee is liable at the UK (England, Wales and Northern Ireland) income tax rates
    Or
  • Record S0T W1/M1 as the amended code where the employee is liable at the Scottish income tax rate(s)
    And
  • Submit details of the payment and tax deducted on an FPS with a leaving date

Further information about the Scottish rate of Income Tax is given at PAYE100035.

The employer must not issue an amended or additional P45 to the employee

If you receive any enquiries about statutory payments, refer the caller to the Employer Helpline.

Statutory payments paid by insolvency practitioner

The PAYE treatment of statutory payments is the same whether an employer or an insolvency practitioner (for example, a liquidator) pays it.

Statutory payments paid by HMRC

No tax will be deducted and HMRC will provide the individual with a certificate (SP710) and send a certificate (SP711) to the tax office.

When you receive a copy of the certificate from the individual or on receipt of the form from the Statutory Payments Disputes Team (SPDT) you should

  • Ensure that if you code out a statutory payment you describe it as ‘Other earnings’ and update income, allowances, benefits and deductions for CY+1 with zero ‘Other earnings’. (Refer to Action guide tax40002 for more information)
  • Ensure the copy of the certificate is scanned and stored on the DMS system where users can then search for the certificate using either the NINO search or by using linked items if there is another scanned image from the same customer