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HMRC internal manual

Statutory Payments Manual

Paying and Recovering - SMP/SAP/SPP/ShPP: how employers can recover

The employer can recover the SMP/SAP/ShPP they have properly paid by making deductions from payments of tax, NICs and other payments due to be paid to Accounts Office but not if:

  • the recovery is being made prior to the date the payment of SP is due
  • the SP was paid in a tax year ending more than six years before the NICs are being paid
  • the employer has asked the Secretary of State to repay the money because:

    • the NICs they are due to pay is less than the SP to be recovered
    • they are no longer liable to pay NICs and their request is still being considered, and
    • they have already been repaid the SP.

Regulations allow an employer who has properly paid SMP to recover it back from the NI Fund within six years of the end of the tax year in which it was paid.

In practice, the employer can deduct SP from combined NICs and PAYE income tax payments to be made to HMRC.

Recovery of SP that has been paid in a previous tax year

If an employer needs to recover SMP/SAP/SPP/ShPP that has been paid in a previous tax year, they cannot claim this from HMRC Accounts Office. The employer should complete form SP32.

Amount due back in SP/NICs compensation more than payments to Accounts Office

In some months the employer may have nothing to send to Accounts Office if the SMP/SAP/SPP/ShPP to be recovered is equal to or more than the total of PAYE and NICs due.

If the employer has not been able to recover all the SP from their NICs and PAYE payments, and as long as their PAYE scheme remains open, they can either carry forward the balance to the next month and recover it then or apply for advance funding. See SPM180700.

Effect of SMP/SAP/SPP/ShPP on Class 1 NICs

If an employer recovers SMP/SAP/SPP/ShPP by deducting it from their payment to Accounts Office, they are withholding NICs they are liable to pay under the SSCBA1992 and associated regulations. To satisfy the requirements of NI legislation, the employer is treated as having paid the withheld contributions.

If SP deductions are less than the NICs due, the date of payment is:

  • the date when the balance of NICs was paid, or
  • the date when the first instalment was paid if the balance is paid by instalments.

If SP deductions are more than or equal to the NICs due the date of payment is the 14t h day after the end of the tax month in which liability for the contributions arose.