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When completing a P14 End of Year Summary for each employee after the end of each tax year, employers are required to report the totals of any statutory payments made to employees during the year.
In the case of payments of SMP, SPP or SAP, the Social Security (Contributions) Regulations 2001 (Schedule 4(22)) require simply that the employer report the amount of any of each payment made to the employee.
However, in the case of SSP, the reporting requirement is different. There is no general P14 reporting requirement as there is for SMP, SPP or SAP. Instead, the reporting requirement only arises if the employer has recovered some of the SSP paid to the employee under the Percentage Threshold Scheme (PTS). This scheme allows employers whose total SSP payments in a tax month exceed 13% of the employer's Class 1 NICs liability for that month.
In that situation, the Social Security (Contributions) Regulations 2001 (Schedule 4(25)) require the employer to report, for each employee, the total amount of SSP that the employer paid in each tax month in respect of which an amount was recovered under PTS. Note that it is the amount of SSP paid to the employee, not the amount of that payment that was recovered.
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Example: A retail employer with 40 shop floor staff (most of whom work part-time) and 4 managers. In tax month 10, the total employer and employee NICs is £;2858.39, 13% of which is £;371.59.
Due to a flu epidemic affecting 20 of the shop staff, the employer pays out £;2101.50 in SSP during month 10. The amount by which the SSP exceeds 13% of the NICs is £;1101.51, all of which can be recovered under PTS from the NICs paid to the Accounts Office for the month.
At the end of the tax year, the employer reports the amount of SSP paid to each of the 20 employees in month 10 on their P14s. Any SSP paid to those employees in other months when the employer was unable to recover any SSP under PTS is not reported.
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Despite these statutory rules for reporting SSP on form P14, HMRC's E14 Helpbook, on page 20, states: "If it is easier for you to record all SSP paid in all tax months, instead of just in the tax months where you made a recovery, you can choose to do that."
We asked HMRC to comment on this apparent concession. In response, HMRC stated:
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"You are correct in stating that the information … is an HMRC concession. Briefly the background to this (as we understand it) was that a number of years back employers were required to record the payment whether or not they were entitled to make a recovery.
The requirement to record only for those months in which a recovery was made was then introduced but, following representations from some software companies who argued that this would be complicated in terms of programming, the concession to allow employers to continue to record all payments regardless of whether or not they made a recovery in that month was proposed as a compromise."
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It is, therefore, permissible for employers to report SSP payments on form P14 in exactly the same way that SMP, SPP and SAP are reported - the total amount paid to the employee in the year, irrespective of whether or not the employer was able to recover any of the SSP under PTS.
...back to 21 September 2006
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For Payroll and Human Resource Professionals
