Payroll operations

Recover statutory payments from HMRC

How to claim back statutory payments (SMP, SPP, SAP, ShPP) from HMRC.

UK-wide
Guide summary

You can claim back most statutory payments (like maternity or paternity pay) from HMRC by reducing your monthly PAYE bill. Small employers with NI under £45,000 last year can claim 103%. Submit an Employer Payment Summary (EPS) by the 19th of the month to apply the reduction.

  • Pay statutory payments to employees first
  • Small employers get 103% recovery (NI under £45k)
  • Standard recovery rate is 92%
  • Submit EPS by 19th of the month
  • Reduce PAYE bill by recoverable amount
  • Cannot recover Statutory Sick Pay (SSP)
  • Extra 3% for small employers covers admin costs
  • HMRC refunds if recovery exceeds PAYE bill
  • Apply for advance funding if needed
  • Includes maternity, paternity, adoption, shared parental pay
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UK-wide

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When you pay statutory payments to employees (maternity, paternity, adoption, shared parental, parental bereavement), you can recover most of the cost from HMRC by reducing your monthly PAYE payment.

What you can recover

  • Statutory Maternity Pay (SMP): 92% or 103%
  • Statutory Paternity Pay (SPP): 92% or 103%
  • Statutory Adoption Pay (SAP): 92% or 103%
  • Statutory Shared Parental Pay (ShPP): 92% or 103%
  • Statutory Parental Bereavement Pay (SPBP): 92% or 103%
  • Statutory Neonatal Care Pay (SNCP): 92% or 103% (from April 2025)

Important: Statutory Sick Pay (SSP) cannot be recovered since April 2014.

Small Employers Relief

You qualify for the higher 103% recovery rate if your total Class 1 National Insurance (employee + employer) in the previous tax year was £45,000 or less.

The extra 3% is compensation for the administrative burden of processing statutory payments.

How to claim recovery

  1. Pay the employee: Include statutory payment in their wages
  2. Report on FPS: Include statutory payment amounts
  3. Submit EPS: Report recoverable amounts by 19th of month
  4. Reduce PAYE payment: Deduct recovery from your monthly bill

If recovery exceeds PAYE liability

If the statutory payment recovery is greater than your PAYE bill (e.g., small employer with employee on maternity leave):

  • Submit EPS: Showing the full recovery amount
  • HMRC will refund: The difference will be credited
  • Advance funding: You can apply for advance payment if needed