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John M Taylor & Co | Accountants Paisley/Taxation/Vat Returns/Business Start Ups/Sage/Payroll/Bookkeeping

Employers: Recovery of Statutory Sick Pay

At the end of the 2013/14 tax year the law changed and Statutory Sick Pay (SSP) Percentage Threshold Scheme was abolished. This scheme allowed employers to recover SSP if, in a tax month, the total SSP paid to employees was more than 13% of the employer’s and employees’ National Insurance contributions in the same month. The Scheme is generally used by smaller employers and/or those employers with a high proportion of employees off on sick leave.

HMRC have confirmed that employers will have until the end of 2015/16 to recover relevant amounts of SSP due under the PTS for the periods up to 5 April 2014. Payroll software generally calculates the amount recoverable under the PTS. However, we thought we should make you aware of this change so that you can:

  • review that SSP has been recovered where appropriate, and
  • make any late claims for amounts due under the Percentage Threshold Scheme before the deadline of 5 April 2016.

New advisory service to be introduced

The abolition of the repayment scheme is being made to partially fund the establishment of a health and work assessment and advisory service to make occupational health advice more readily available to employers and employees. This will potentially help employers to better manage sickness absence. The new service includes a State-funded assessment by occupational health professionals for employees who are off sick for four weeks or more. The new service is expected to be available by autumn 2014.

Some actions recommended by the occupational health professional may include recommendations for work-focused occupational health interventions, such as physiotherapy. The new service will not pay for these types of costs. The Government has estimated the average cost of interventions as £150-£250 per individual.

If the employer pays for these costs, current tax legislation treats the costs as an assessable benefit in kind to the employee. This will create an income tax liability for the employee and a National Insurance charge for the employer. In order not to deter employees from participating in the suggested health treatment, costs paid for by the employer (up to an annual cap of £500 per employee) will not be subject to income tax or National Insurance.

Additional costs for the employer

Clearly the removal of the SSP repayment scheme and the potential employer funding of some treatment costs will result in extra direct costs being incurred by an employer. But the Government considers these costs will be outweighed by the indirect savings that will be made by getting an employee back into productive work.

It is unfortunate there is a gap between the withdrawal of the SSP repayment scheme and the introduction of new health and work assessment advisory service.

However, there is some help available for small and medium sized businesses. There are occupational health advice services in England, Scotland and Wales which are funded by the Department of Work and Pensions. We suggest you do an internet search on ‘Health for Work Adviceline’ if you would like some assistance in respect of an employee with health issues.

If you would like further information on the withdrawal of SSP repayments, please do not hesitate to contact us on 0141 848 7474 or drop us an email at mail@johnmtaylor.co.uk and we shall be happy to assist.

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