For the purposes of statutory parental leave payments, there are no rules in respect of connected companies which prevent more than one connected company from claiming small employer’s relief (SER).
The Statutory Maternity Pay (Compensation of Employers) and Miscellaneous Amendment Regulations 1994 defines a small employer under regulation 2(1) as an employer whose contributions payments for the qualifying tax year do not exceed £45,000. Firstly, the legislation refers to the singular employer which under regulation 1 of the same regulations defines employer without reference to, or any mention of, connected employers.
Further to this, looking to the meaning of ‘contribution payments’, we refer to regulation 1 again which uses the same meaning given under section 167(8) of the Social Security Contributions and Benefits Act 1992. This describes contributions payments as any payments which the employer is required, by or under any enactment, to make in discharge of any liability in respect of primary or secondary Class 1 contributions. Again, this refers only to the singular employer’s liability. It is worth noting that the liability to consider against the £45,000 threshold for SER includes both primary and secondary class 1 liability arising on payments made by an employer.
Effectively, this means that employers which are connected to other employers but whose businesses are independent businesses in their own right may independently claim SER. HMRC’s commentary for sole owner of multiple businesses reflects this per SPM181900. However, if a business has elected to have multiple PAYE schemes per regulation 98 of the PAYE Regulations 2003, the business must aggregate the total NIC liability to assess their entitlement to SER. See Croner-i commentary to further support this particular point.
SER is claimed via the PAYE employer payment summary and is offset against liability arising in the tax period in which payment of SMP is made by the employer per regulation 6 of the above-mentioned regulations for SMP.
Small employer’s relief is also available to all other statutory parental payment types and adhere to the same meaning of a small employer across the board. There is a list of all applicable legislation in SPM182000.
