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A ‘Sickener’! End Of The SSP Percentage Threshold Scheme

Shared from Tax Insider: A ‘Sickener’! End Of The SSP Percentage Threshold Scheme
By Sarah Bradford, April 2014
Sarah Bradford outlines what the ending of the SSP percentage threshold scheme means for employers.

The statutory sick pay (SSP) scheme provides employees who are absent from work through sickness with a minimum level of income as long as they satisfy certain qualifying conditions. The weekly rate of SSP is £86.70 for 2013/14, increasing to £87.55 for 2014/15. 

Statutory sick pay is initially paid by the employer. However, the percentage threshold scheme allowed employers who have a high percentage of their workforce off sick at any one time to recover some or all of the SSP that they have paid. The percentage threshold scheme is being abolished at the end of the 2013/14 tax year.

Recovery under the percentage threshold scheme
Unlike recovery of other statutory payments (statutory maternity, paternity and adoption pay), there is no automatic recovery of SSP, and the extent of any recovery is not dependent on the size of the employer. The same scheme applies to all employers, irrespective of size. Unless the employer qualifies for recover under the scheme, it is not possible to recover any SSP paid.

To recover SSP under the percentage threshold scheme, the total amount paid out in the form of statutory sick pay in the month must be more than 13% of the total (employer and employee) National Insurance contributions (NICs) liability for that tax month. The amount of SSP which can be recovered under the scheme is the amount by which the SSP paid in the month exceeds 13% of the NICs liability for the month. The calculation is performed for each tax month, even if the employer pays PAYE and NICs over to HM Revenue & Customs (HMRC) on a quarterly basis. 

Example - Calculation of amount recoverable

Tulip Ltd has paid out SSP of £173.40 in a tax month in 2013/14. Its total NICs bill for the month (employers and employees) is £544.14, of which 13% is £70.73.

The SSP paid in the month exceeds 13% of the NICs bill for the month, so Tulip Ltd can recover the excess of £102.67 (£173.40 - £70.73).

Method of recovery
Where recovery is permitted under the scheme, the recovery is made by deducting the amount to be recovered from the PAYE, Class 1 NICs, student loan deductions and construction industry scheme deductions payable to HMRC. If it is not possible to recover all the SSP paid out in tax month in question, any balance can be recovered the following month. If the employer does not have sufficient deductions from which to fund payment of statutory payments, a claim for funding can be submitted to HMRC to cover the shortfall.

End of recovery
The percentage threshold scheme comes to an end at the end of the 2013/14 tax year. This means that from 6 April 2014, employers will not be able to recover any SSP paid to employees and will need to meet this cost themselves. The obligation to pay SSP to eligible employees remains. 

Employees will have until the end of the 2015/16 tax year (i.e. 5 April 2016) to recover any recoverable SSP paid before the end of the 2013/14 tax year.

New health and work scheme
The government have committed to using the money saved by the abolition of the percentage threshold scheme to set up a new health and work service. The new service will comprise two elements – advice and assessment. 

Employees, employers and GPs will be able to access a phone and web-based health and work service. After an employee has been sick for four week, they will be able to be referred by their GP (or by their employer in the absence of a GP referral) for an assessment by an occupational health professional.

The scheme aims to provide support to enable employees to return to work more quickly thus saving employer’s money in terms of reduced sickness absence costs.

Other changes
The current SSP record keeping requirements associated with the percentage threshold scheme are also abolished from 6 April 2014. However, employers will still need to keep sickness records for PAYE purposes, and to produce them if requested to do so by HMRC.

Practical Tip:
Review SSP payments prior to 6 April 2014 for any missed recoveries, and ensure that where SSP can be recovered, the recovery is made by 6 April 2016. 


Sarah Bradford outlines what the ending of the SSP percentage threshold scheme means for employers.

The statutory sick pay (SSP) scheme provides employees who are absent from work through sickness with a minimum level of income as long as they satisfy certain qualifying conditions. The weekly rate of SSP is £86.70 for 2013/14, increasing to £87.55 for 2014/15. 

Statutory sick pay is initially paid by the employer. However, the percentage threshold scheme allowed employers who have a high percentage of their workforce off sick at any one time to recover some or all of the SSP that they have paid. The percentage threshold scheme is being abolished at the end of the 2013/14 tax year.

Recovery under the percentage threshold scheme
Unlike recovery of other statutory payments (statutory maternity, paternity and adoption pay), there is no automatic recovery of SSP, and the
... Shared from Tax Insider: A ‘Sickener’! End Of The SSP Percentage Threshold Scheme
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