Directors on payrolls: Statutory Maternity Pay (SMP)

Directors of companies are perfectly entitled to claim Statutory Maternity Pay (SMP). However, the director must have a contract of employment before they qualify for SMP. If they qualify for SMP, then the payment is calculated as it would be with any other employee. If the Director does not have a contract of employment, then they need to apply for maternity allowance. HMRC have indicated that the contract could be verbal, although it is advised that this should not be relied on.

When Auto-Enrolment launched in 2014 it was broadly assumed that director only payrolls are exempt from Auto-Enrolment. This is not the case. There are many reasons why a director can be exempted from Auto-Enrolment and the link below lists these in detail. If a director does not qualify as exempt, then, like every other employee, they should be assessed for pension payments every time a payroll is run. This rule applies to all directors & not just those in director only companies.

The link below lists the many reasons why a director can be exempted from Auto-Enrolment:

https://www.thepensionsregulator.gov.uk/en/business-advisers/automatic-enrolment-guide-for-business-advisers/director-exemptions-from-automatic-enrolment

For more information or advice, please do get in touch with your local Whitings LLP Office

Disclaimer - All information in this post was correct at time of writing.