SMP for director of a limited company - help!!

[mogwai]

I work as a locum in the NHS. I have been working like this since May 2008 and I'll soon be going off on maternity leave.

I am paid by an agency, who pay a limited company, of which I am the director.

This company then pays me minimum wage and I take the rest of my week's salary as dividends.

Can anyone advise how I go about claiming SMP? I think the company has to pay me and claim back from the governemnt? How on earth do you do this??

Do you have someone doing your payroll or do it yourself? (year end P35 etc).

basically you put it through the payroll, submit your P35 at the end of the tax year and effectively have an overpayment which HMRC will eventually get round to repaying.
Small employers get 100% of SMP plus a 4.5% admin compensation.

If you are still in the relevant weeks for the determination of SMP (weeks 18-25 iirc) then you should consider putting up your pay and suffering the tax, thereby being eligible for a greater amount for the first 6 weeks.

I have someone else doing my payroll - do I ask them to sort it out

(thanks for your replies by the way)

yes, ask them to sort it - that's what you (presumably) pay them for.

Hi Mogwai

ChasingSquirrels is right. And you should get your accountant/payroll person to do this for you. Mine has just done the very same for me in the last couple of months.

There's one small piece of good news for you by the way, in case you hadn't already worked it out. As an employee of your own limited co you are entitled to 39 weeks SMP - about £4K.

But you are also a company director. The company can continue to trade (and you will doubtless want it to, why shut down?) during the nominal 39 weeks of your maternity leave. In plain English - if you want to start working/invoicing again through the company before your 39 weeks maternity leave is up, you can do so, whilst still retaining SMP for your employee, coincidentally (but not in legal terms, necessarily) also you. So you could start invoicing again after you've taken x weeks maternity leave without losing your right to the rest of the SMP (£100 a week better than a kick in the teeth although presumably small recompense for what you normally invoice for in a week).

When will your company get the money from the Treasury? Depends on your accountant and your company year end. So don't bank on them either paying you it all at once, paying you immediately or paying you £100 a week in regular instalments.

HTH, MrsBaldwin

but who actually pays??

If I am the director then aren;t I paying myself?

gettign it at a rate of £100 per week would be preferable to waiting until the end of the tax year.

This is a confusing area ...

You will have understood already - but as maybe not everyone reading the post will, I'll explain - that the way you work means you wear two hats at once - a company director hat (with this hat on you take profits from the company in the form of dividends) and an employee hat (with this hat on you receive a wage from the company in exchange for your labour).

You get SMP wearing your employee hat. Your company then tells the Treasury its got an employee on maternity leave. The Treasury 'reimburses' the company.

The timing of individual payments from the company to the employee is of no interest to the Treasury ... meaning that your company can pay you in a way that suits its own systems.

If your company would like to pay you £100 a week in 39 chunks it's perfectly entitled to do so. But the Treasury systems don't work in the same way - your company is more likely to get the £4K owing as a couple of lump sums.

Who pays? The Treasury in the end, to cut a long story short, but if you the employee want £100 a week paid into your personal bank account from your company's bank account whilst you're on maternity leave then you the company director need to ensure there's the cashflow to cover this - your company systems are essentially giving you an advance on the £4K that will eventually come your way.

Can I strongly suggest you see an accountant about this? They will need to fill in some forms and send them off to HMRC. One of those forms may allow your company to claim some of the money quickly.

HTH, MrsB

PS Before I was hugely pregnant I used to do other stuff on a Saturday night at 2300 - ha!

this has clarified things enormously - thankyou for taking the time to respond, I can now make the necessary arrangements!

You're a star, Mrs B

No worries

Don't forget the crucial point in my first post - with your company director hat on you don't have to take 39 weeks off, but with your employee hat on you still get 39 weeks SMP.

So if you decide after less than 39 weeks maternity leave you want to do a couple of days work a week, say, you can do this without affecting the £4K (as long as your accountant has filled in the forms correctly etc).

Mrs B