Spring is here, full of promises of fresh beginnings and new life
While we’re thinking about cute bunnies, baa lambs and chicks, have you considered what you’d do if one of your own staff were to come to you with ‘happy news’?
It could happen any time of course, and while new life is always something to be celebrated, in a micro business, a key team member announcing they’re pregnant can mean headaches for the business owner – operationally because all staff are likely to be key, financially because subject to how long they’ve been with you, they’ll be entitled to claim Statutory Maternity Pay (SMP), and although you will be reimbursed by the government, there’s still a possibility that your business could find itself out of pocket in the short term.
HMRC will reimburse SMP by calculating a reduction in the tax and NI payments your business makes, but if your business is very small, it’s quite possible you might not actually owe anything, in which case, you can be left having to pay out SMP with nothing to deduct it against. Recognising that this could create cash flow issues for businesses in this position, the government allows them to claim SMP in advance, so they receive a lump sum before they have to begin paying out.
It’s a simple and neat solution that can help you avoid cash flow problems, but you need to apply for advance payment in good time, in order that HMRC can verify your situation, and process your claim. Additionally, whoever has responsibility for salaries in your company will need to understand how to manage the advance with regards to your payroll. This is an area we are very familiar with at Inca – we’re well equipped to support our clients through the process of making a claim, and allocating salary payments against an advance.
If your business employs staff, there’s a very good chance that at some point, you’re going to find yourself having to deal with SMP (you could slip Bromide into your coffee machine, but we wouldn’t condone this!) – if or when you do, being aware that your business can claim SMP in advance could assist with smoothing over cash flow challenges, and even help you fund cover for the staff member you’re going to be temporarily without.
If we are already looking after your payroll and you want to claim an advance payment, all you have to do is notify us and we’ll do the rest.
There is a small fee for processing the claim, but there are no additional charges to making the adjustments to your payroll each month.