2014 changes to statutory sick pay
One of the lesser known changes in this year’s Budget relates to Statutory Sick Pay (SSP) brought in partly due to the rather bizarre belief that the old system provided no encouragement for an employer to get an employee back into work.
SSP is a legal requirement and is paid to employees for up to 28 weeks at a rate of £87.55 per week if they are off work due to illness. As an employee of a Limited Company you would be entitled to this, provided you earn at least £111 a week and are classed as an employee (there’s another discussion to be had there around being an employee and therefore being paid National Minimum Wage, but we’ll leave that one for another blog…!)
The SSP payment is taxable, is paid the same as any normal salary, and only starts when the employee has been sick for 4 or more days. The employer then used to be able to reclaim this via their PAYE scheme as long as the SSP exceeded 13% of the gross NI in the same month (known as the percentage threshold scheme). No more.
The Government have concluded that the scheme was used by 100,000 employers at a cost of £50 million to the Exchequer, which could be better spent by establishing a state funded “Health and Work Assessment and Advisory Service” that will provide access to independent occupational health experts and support employees retuning to work, after they’ve been off for 4 weeks or more. What they seem to have missed is that this will really only hit small employers, who could find their overall employment costs increase a great deal if they have staff off sick and then also have to pay temporary staff to cover.
Even if you are entitled to SSP it’s a good idea to get separate protection in place as the amount you’ll receive is not likely to cover your household bills!
For more information please speak to your contractor accountant for guidance.
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.