§ The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond)
Currently small employers whose gross national insurance contribution payments in a tax year are £40,000 or less (the Small Employer's Relief Threshold) can recover 100 per cent. of the Statutory Maternity Pay (SMP) they pay out plus an additional amount of 4.5 per cent. in compensation for the employers' share of National Insurance contributions due on SMP payments. Small employers paying out Statutory Adoption Pay (SAP) and Statutory Paternity Pay (SPP) recover those payments on the same basis as for SMP.
The threshold has been £40,000 since April 2002 when it was doubled in anticipation of the recent improvements made to maternity pay. Doubling the threshold meant that around 60 per cent. of all employers paying SMP, SPP and SAP in a year will get full reimbursement. The increase in national insurance contributions from April 2003 will affect the number of small employers able to claim full reimbursement from 6 April 2004. The threshold is therefore being increased to £45,000 from 6 April 2004 to continue to ensure that around 60 per cent. of all employers paying SMP, SPP and SAP will get back 104.5 per cent. of the money they pay out. Regulations will shortly be laid to achieve this change.