Intouch Accounting celebrate International Men’s Day

International Men’s Day

It’s International Men’s Day (IMD), celebrated in over 100 countries across the world to recognise the contribution men make to those around the them, their family and friends, their world place and the community, the nations and the world. We are marking this event by championing all of the men who are doing what they love as contractors through their own Limited Companies.

 

In particular we will look at the rights men have when it comes to paternity pay and how they can support their families once they go back to contracting after paternity leave.

 

What are the rules surrounding payment?

To be eligible for Statutory Paternity Pay (SPP) you must be either the child’s biological or adoptive parent.

 

How much and when can you expect to be paid during paternity leave?

As a contractor of course you can make arrangements to take time out of contracting for as long as you wish and it’s a good idea to make provisions to ensure you have enough money to put aside to cover these periods when you are not earning. But the good news is, you can claim SPP for up to two weeks of paternity leave. You can expect to be paid within eight weeks of the biological child’s birth date, or the adopted child’s date of placement within your family.

If you take either one to two week’s paternity leave, it can be taken with SPP of 90% of your average weekly earnings (AWE), or £139.58 (whichever is lower). Make sure you let your contractor accountant know of the expected date of arrival, so that they are prepared to start your SPP payments.

 

What you should do if SPP isn’t enough to support you and your family

If you are worried that 90% of your SPP won’t be enough to support you and your family for the duration you wish to take, there are a few things you can do in order to make yourself more financially comfortable:

  • try to sync a break in contracts (as best you can!) with your child’s arrival date – that way you will therefore suffer little or no unexpected financial impact
  • budget for the time you expect to be off of work, save 5% of your monthly income over a period of seven months, to cover each week you wish to take off for your paternity leave

 

Beyond paternity

Caring for your child doesn’t just end the second your paternity leave stops. When you return to work, finding suitable childcare can be a real challenge. In the Summer Budget the Government announced they will be giving free childcare to working families with three and four year old children from September 2017 (increasing from 15 to 30 hours).

In addition to this the Childcare Voucher Scheme will continue until early 2017 when the new tax free childcare is to be introduced.

 

Final thoughts

Being a contractor and Dad should never be a ‘one or the other’ scenario and Intouch Accounting help out by providing all the support and guidance you’ll need when considering your working options whilst starting a family. Our team of specialist Personal Accountants are on hand to answer any questions our clients have and can advise on the best working practice from the moment you find out you’re expecting, through to childcare and beyond.

 

Call our team of advisers on 01202 375 562 to discuss joining Intouch Accounting today.

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Sick pay, maternity pay and paternity pay

Sick pay, maternity pay and paternity pay

What can you claim? How long do you have to work for your company before you’re entitled to claim, and what are the alternatives if you’ve not worked long enough?

As a Limited Company contractor, if you fall ill and are unable to work the responsibility lies with you to organise statutory sick pay for yourself through your company. This is also the case if you or your partner becomes pregnant and you want to claim statutory maternity or paternity pay. Your contractor accountant will be able to advise you on this, but it is helpful to be aware of the general rules on what you can claim and for how long.

 

Statutory Sick Pay (SSP)

If you fall ill, as an employee of your Limited Company you can claim up to £85.85 SSP per week. If the condition is serious, the maximum period this is payable is up to 28 weeks. SSP is paid from the company directly to the contractor and the amounts are deducted from the PAYE paid over to HMRC.

To qualify you must earn above the lower weekly earnings limit of £107. Also, there are three ‘waiting days’ before SSP is payable and each day paid must be a Qualifying Day. This means that it must be a day that is normally a business working day for you e.g.  Monday to Friday.

For SSP it does not matter how short a time you have worked for your company. As long as you have done at least some work you can qualify for payment.

SSP is not likely to cover the income you’re used to, so it’s a good idea to also consider separate health or life insurances.  Your contractor accountant will be able to recommend someone you can talk to about such things.

 

Statutory Maternity Pay (SMP)

Statutory Maternity Pay is paid to female employees who have recently given birth or who are about to give birth. To qualify they must worked for the company ‘for at least 26 weeks up to the 15th week before the expected week of childbirth – known as the ‘qualifying week’’.

The rules on SMP state that:

  • The company must ordinarily be given 28 days notice of maternity leave
  • Medical evidence of pregnancy (Form MATB1) must be provided
  • Average weekly earnings (AWE) must be above the lower earnings limits for the relevant period
  • SMP is not payable in any week that the employee does some work

An employee may take up to one year off in the weeks before and after the birth, but not all of this time qualifies for SMP.

An employee can claim up to 39 weeks SMP at the following rates:

  • 90% AWE for the first six weeks
  • 90% AWE or £135.45 per week – whichever is lower – for up to 33 weeks

SMP is regarded as salary and is therefore subject to all relevant taxes.

For small companies it is possible to reclaim 100% of SMP payments in addition to 3% NIC compensation from HMRC.

If a Limited Company contractor does not qualify for SMP, either because they have not worked for the company long enough or because they earn below the lower income threshold, then they may qualify for Maternity Allowance (MA). This pays £136.78 for up to 39 weeks or 90% of your AWE – whichever is lower.

 

Statutory Paternity Pay

Statutory Paternity Pay (SPP) is payable to male employees who are biological or adoptive parents of a newborn and is payable within 8 weeks of the birth or the date the baby is placed with them.

One or two weeks’ paternity leave can be taken with SPP of 90% of AWE or £135.45 – whichever is lower. If you have a contractor accountant ensure that you give them sufficient notice of when you would like SPP payments to commence.

As with SMP, if you are a small company you can claim 100% of SPP payments made in addition to 3% NIC compensation.

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.