Developers Guide to SAP
DEVELOPERS GUIDE TO STATUTORY
ADOPTION PAY (SAP)
TEST DATA AND GUIDANCE FOR DEVELOPERS
2014/2015 AND 2015/2016
SDST Guide for SAP
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Contents
Rounding to the nearest whole month when there isn’t a whole number of months in the relevant period
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INTRODUCTION
This document is produced by HMRC’s Software Developers Support Team (SDST) and replaces the SAP technical specification. It brings together information from SDST’s payroll test data, the SAP technical specification, Gov.uk website and the E16 Employers Helpbook for Statutory Adoption Pay which is no longer available.
HMRC has replaced the Statutory Payments Employer Helpbooks with the information now on the Gov.uk website www.gov.uk/government/collections/statutory-pay
This document includes:-
Test inputs, answers and calculation examples
SAP rules/guidance and links to Gov.uk
Technical guidance for developers.
Validation checks and common data items.
The tests in this document are not a set of mandatory SAP requirements for payroll software. Developers are free to produce their own solutions based on the requirements described in this document and the SAP guidance on the gov.uk website. The level of SAP functionality may vary between payroll software products so some tests will not apply to all products.
The first section contains tests and guidance for the SAP changes that take effect on 5 th April 2015. The remainder of the document relates to the 2014/2015 tax year.
The tests in this document use a Monday to Friday work pattern unless otherwise stated and where SAP is payable, it is assumed the relevant qualifying conditions have been met.
If you have any queries with the information in this document please email the Software Developers Support
Team.
Abbreviations
APP
AWE
DOP
Adoption Pay Period
Average weekly earnings
Date of Placement
Earnings rate of SAP (90% average weekly earnings) ER
KIT
MW
RP
Keep In Touch Days
Matching week
Relevant Period for calculating AWE
Statutory Adoption Pay SAP
SR
SSP
Intended parents
Standard Rate of SAP
Statutory Sick Pay
Intended parents in surrogacy cases who meet the requirements and intended to apply for a parental order
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TEST DATA AND GUIDANCE FOR DEVELOPERS
STATUTORY ADOPTION LEAVE AND PAY CHANGES FROM APRIL 5
TH
2015
1) On 5 th April, Statutory Adoption Leave will become a ‘day one’ right and the 26 week continuous employment rule for Statutory Adoption Leave will be abolished. Anyone who correctly notifies their employer of their entitlement to adoption leave on or after 5 April does not need a qualifying period of service. This means all matches on or after 5 April will automatically fall into the new regime, as well as some matches before 5 April. The employer does not need to know the date of matching for the purposes of adoption leave
(but they can ask for the information) – only the date that they are correctly notified by their employee of an entitlement/intention to take adoption leave.
The qualifying conditions for Statutory Adoption Pay are not changing.
The 26 week employment rule will continue to be a qualifying condition for payment of Statutory Adoption Pay.
2) New requirement: The first 6 weeks of SAP will be paid at 90% of the average weekly earnings. After that
SAP will be paid at the lower of either the weekly standard rate or 90% average weekly earnings. This will mirror the current arrangements for SMP. This applies to all adoption pay periods which start on or after 5
April 2015.
3) The 14/15 Standard Rate of SAP is used in the test cases below because the15/16 rate has not been announced yet. The tests will be updated to the new rate when is available.
Other changes (further detail will be published on Gov.uk as part of the employer guidance):
4) There will be a new right to time off for adopters to attend adoption meetings – paid time off to attend 5 meetings for the “primary” adopter and unpaid time off for the “secondary” adopter to attend 2 meetings.
5) Intended parents in surrogacy cases who intend to apply and are eligible to obtain a Parental Order will become eligible for time off for up to 2 ante-natal appointments, statutory adoption leave and pay and, if eligible, shared parental leave and pay.
The intended parents in surrogacy cases may become entitled to adoption leave and pay even though they are not adopting the child. They are not entitled to maternity leave and pay because that is restricted solely to the women who give birth. The birth mother in surrogacy situations is still entitled to maternity leave and pay.
Adoption leave/SAP for intended parents will be available for babies due on or after 5th April 2015 but it can only be taken from the date of birth (unlike adoption leave/SAP for GB adoptions where it can be taken up to 2 weeks before the child arrives). If the baby is born early (between 1 December and 4 April), the intended parents will still be entitled to adoption leave/SAP (and paternity leave and pay), however under the old regime – where there is a 26 week qualifying requirement and no enhancement to pay.
6) Prospective adopters who have a child placed with them under concurrent planning arrangements may also be entitled to statutory adoption leave/pay and shared parental leave/pay if they meet the eligibility requirements. This is sometimes known as fostering for adoption. In these scenarios, individuals who are approved as local authority adopters, and have also been approved as suitable to adopt a child (prospective adopter) may have a child placed with them who it is probable will, ultimately, be adopted by them. Whether a placement is a normal fostering arrangement or a fostering for adoption arrangement will be clear before the placement happens. Whereas regular foster parents are not entitled to adoption leave and pay, prospective adopters may be entitled to adoption leave and pay when a child is placed with them.
Entitlement to adoption leave and pay applies to prospective adopters where they are matched with the child on or after 5 th April 2015. Statutory adoption leave and pay for this group can be taken up to two weeks before placement, however, in reality, prospective adopters are likely/may be likely to have significantly shorter notice of then the child is coming to live with them.
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15/16 Changes Test 1
Test Description
Calculation of ER
1) SAP Earnings rate (90% of
AWE) should be rounded up to the nearest penny even if the fraction of a penny is less than 0.005.
Test Data
Date of placement 17/05/2015
SAP from 17/05/2015
Earnings are £2001.23 per month during the relevant period.
AWE = 2001.23 x 12 / 52 =
461.82230
Earnings Rate = 461.82230 x
90% = 415.64007 rounded up to £415.65
Expected Result
Software calculates an Earnings
Rate of £415.65
15/16 Changes Test 2
Test Description
Earnings Rate (ER) paid for 39 weeks
Test Data
2) When the Earnings rate of
SAP is less than the Standard
Rate. The Earnings Rate is payable for 39 weeks.
Date of placement 01/06/2015
Matching Week 03/05/2015
Start date of SAP 01/06/2015
Employee receives £153.52 per week.
Expected Result
Software pays £138.17 for 39 weeks.
Ave weekly earnings are
£153.52
Earnings rate is 153.52 x 90%
= £138.168 rounded up to
£138.17
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15/16 Changes Tests 3, 4, 5 and 6 ER paid for first 6 weeks
If the employee meets the 26 week employment rule and has AWE at or above the LEL then the first six weeks of SAP will be paid at 90% of the employee’s Average Weekly Earnings (AWE).
After that SAP will be either the weekly standard rate (SR) or 90% of the employee’s Average Weekly
Earnings, whichever is less.
Where ER is > SR and the employee loses entitlement to SAP in one of the first 6 weeks of the APP, SAP will be lost at the SR first. The first 6 weeks of SAP payment due will always be at the ER and one week of SAP at the SR will be lost – see test 6 below.
Test Description
3) The Earnings rate is payable for the first 6 weeks of the APP
4) If ER is > SR then ER is paid for 6 weeks only
This test: attempt to pay ER for 7 weeks
5) If ER is > SR then ER is paid for 6 weeks only
This test: attempt to pay ER for 5 weeks
6) The first 6 weeks of SAP are always paid at the ER
This test: ER > SR and there is no entitlement to SAP in 3 rd week. For example SSP is due.
Test Data
Matching Week 24/05/2015
Date of placement 01/06/15
SAP Start date 01/06/2015
Employee receives £153.54 per week.
Ave weekly earnings are
£153.54
Earnings rate is 153.54 x 90%
= £138.186 rounded up to
£138.19
Matching Week 24/05/2015
Date of placement 01/06/15
SAP Start date 01/06/2015
Attempt to input SAP Earnings rate for 7 weeks
01/06/15 – 19/07/2015
Matching Week 24/05/2015
Date of placement 01/06/15
SAP Start date 01/06/2015
Attempt to input SAP Earnings rate for 5 weeks
01/06/15 – 05/07/15 and
Matching Week 24/05/2015
Date of placement 01/06/15
SAP start date 01/06/15
Sick 15/06/15 – 18/06/15
Employee is not eligible for
SAP in week 3 only (e.g. employee is sick and entitled to SSP)
Employee recovers and is no longer sick for week 4 and
SAP re-commences.
Assume AWE are > LEL and
ER is > SR
Expected Result
S oftware pays £138.19 for first 6 weeks of APP:-
01/06/15 – 12/07/15
Software pays £138.18 per week for remainder of APP.
Software does not allow
Earnings Rate for 7 weeks
Software does not allow
Earnings rate to be paid for less than 6 weeks.
SAP paid as follows:-
ER 01/06/15
(2 weeks)
(4 weeks) been paid:-
– 14/06/15
No payment of SAP in week 3.
ER 22/06/15 – 19/07/15
SR 20/07/15 – 28/02/16
Total of 38 weeks of SAP have
6 weeks at ER
32 weeks at SR
One week of SAP at the SR was lost for the week in which SSP was paid.
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14/15 GUIDANCE AND TEST DATA FOR SAP
ENTITLEMENT TO SAP
Entitlement Test 1 SAP is payable for a maximum of 39 weeks. www.gov.uk/adoption-pay-leave/pay
Test Description
1) SAP is payable for a maximum of 39 weeks.
Test Data
SAP: 17/05/2014 - 13/02/2015 (39 weeks)
Matching Week: 06/04/2014
Date of Placement 17/05/2014
Attempt to input SAP from 14/02/2015
Expected Result
Software does not allow SAP to be paid from 14/02/2015
Entitlement Tests 2, 3, 4 26 week employment rule
To get SAP the employee must be employed for at least 26 weeks continuing into the MW. www.gov.uk/adoption-pay-leave/eligibility
There are some breaks in employment that can count towards the 26 weeks. www.gov.uk/continuous-employment-what-it-is
The underlined text in the test description below is a good way of thinking about this requirement but the same result can be obtained as follows:-
SAP not due if the employment start date is > (MW Saturday - 25 weeks)
Test Data Expected Result Test Description
2) SAP is payable if the person was continuously employed for
26 weeks leading into the MW.
This rule is satisfied if part of the
26th week of employment overlaps any day in the MW.
3) SAP is not payable if the first day of the 26 th week of employment occurs after the
Saturday of the MW.
4) SAP is not payable if the person was employed for 26 weeks but employment did not continue into Matching Week.
Employment Starts: 12/04/2014
Matching Week: 28/09/2014
Date of Placement 17/10/2014
Attempt to input SAP from 17/10/2014
26 th week of employment starts on
04/10/14 and last day of MW is
04/10/14.
Employment Starts: 13/04/2014
Matching Week: 28/09/2014
Date of Placement 17/10/2014
Attempt to input SAP from 17/10/2014
26 th week of employment starts on
05/10/14 and last day of MW is
04/10/14
Employment Starts: 21/03/2014
Employment ends: 27/09/2014
Matching Week: 28/09/2014
Date of Placement 17/10/2014
Attempt to input SAP from 17/10/2014
Software allows SAP to be paid.
Software does not allow SAP to start.
Software does not allow SAP to be paid.
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Entitlement Test 5 SAP comes to an end when more than 10 KIT days are worked
An employee can work for their employee under their contract of service during their SAP pay period for up to ten days without losing their SAP for the weeks in which that work is done. These ten days are called
‘Keeping in Touch’ (KIT) days and enable the employee to undertake the odd day’s training or do some work on occasions to keep in touch during their adoption leave without losing SAP or ending their adoption leave.
The KIT days may be used consecutively, singly or in blocks, it is for the employee and employer to agree how they should be used if your employee wishes to do some work. But any work on any day (even as little as an hour) will count as a whole KIT day.
You cannot pay SAP to the employee when they exceed the KIT 10 days. The adoption leave will come to an end when they work the 11 th day and the last day for payment of SAP would be the end of the previous SAP week.
Following policy advice this test has changed from 14/15 SAP test data we published earlier this year. The
SAP and adoption leave now end irrevocably instead of only losing SAP for the week in which the 11 th day was worked. https://www.gov.uk/statutory-adoption-pay-employee-circumstances-that-affect-payment
Test Description
5) SAP comes to an end when more than 10 KIT days are worked
Test Data
Matching Week 06/04/2014
Date of Placement 20/05/2014
SAP from 20/05/2014
For the purpose of this test 10 KIT days have been taken within the period
20/05/2014 – 30/06/14
Returns to work for one day on
01/07/2014
Expected Result
Adoption leave comes to an end and last day for payment of SAP is
30/06/14.
Entitlement Test 6 Employee taken into legal custody
If the employee is taken into legal custody the employer should stop paying SAP and give their employee form
SAP1.
If the employee is released before the end of the SAP pay period any subsequent weeks, which are still within the SAP pay period, are paid by HMRC, not the employer. www.gov.uk/statutory-adoption-pay-employee-circumstances-that-affect-payment#employee-taken-into-legalcustody
Test Description Test Data Expected Result
6) SAP is not payable for any week in which the employee is in legal custody.
Matching Week 06/04/2014
Date of Placement 20/05/2014
SAP start date 20/05/2014
Taken into legal custody 05/06/14.
SAP end date is
02/06/2014 and no further SAP payments are made by the employer.
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Entitlement Test 7 SAP is not payable in any week where SSP is payable
Where the incapacity ends within the SAP pay period, payment of SAP will recommence at the start of the next SAP pay week following the end of the employee’s incapacity to work.
www.gov.uk/statutory-adoption-pay-employee-circumstances-that-affect-payment
Test Description Test Data Expected Result
7) SAP is not payable for any week where SSP is payable.
Matching Week 06/04/2014
Date of Placement 20/05/2014
SAP start date 20/05/2014
Employee notifies sick 27/05/14-
30/05/14 and is entitled to SSP
SAP paid 20/0514- 26/05/14
SSP paid 30/05/14
SAP recommences 03/06/15
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PAYING SAP
SAP should be paid in the same way as you would pay earnings and for the same period. All the usual deductions apply, including PAYE tax and National Insurance contributions (NICs), except
Attachment of Earnings Orders or Deductions of Earnings Orders for the Child Maintenance and
Enforcement Commission (Arrestment of Earnings Orders in Scotland).
SAP is paid for up to 39 weeks. The rate of pay is the lower of the Standard rate of SAP or 90% of
AWE which is known as the Earnings Rate.
NOTE: For adoption pay periods which begin on or after 5 th April 2015 the first six weeks SAP will be 90 per cent of the employee’s AWE. After that SAP will be either the weekly standard rate or 90
per cent of the employee’s AWE, whichever is less. See STATUTORY ADOPTION LEAVE AND
PAY CHANGES FROM APRIL 5TH 2015
SAP can also be paid in a lump sum at the start of the Adoption Pay Period. This could cause an overpayment if the employee's circumstances change, and the employer and employee may also pay more in National Insurance Contributions. It could also cause an under-payment if the
Adoption Pay Period spans a tax year and the new rate is not known at the time the payment is made.
Entitlement to SAP is always in full weeks. However payment for full weeks of entitlement can be
split across pay periods to align the SAP payments to the employees normal pay period. See Part
The APP can start on any day of the week.
Paying SAP Test 1 Calculation of the ER should round up all fractions of a penny.
The earnings rate is 90% of the AWE. The AWE figure should be held truncated to 5 decimal places.
Test Description Expected Result
1) Calculation of the
Earnings Rate (ER) should round up all fractions of a penny.
Test Data
Employee paid £500.26 per month.
MW 20/07/2014
Date of Placement 25/07/2014
SAP from 25/07/2014
Average weekly earnings =
£115.44461
SAP earnings rate = 115.44461 x
90% = 103.90014 rounded up to
£103.91
Software calculates ER of
£103.91
Paying SAP Test 2 SAP is payable if employment ends after the date of matching.
SAP is payable if employment ends after the date of matching but the employee should not be paid
SAP for any week in which they work for another employer that did not employ them during the
MW. It is up to the employee to tell the employer they are working for another employer. www.gov.uk/statutory-adoption-pay-employee-circumstances-that-affect-payment
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Test Description
2) SAP is payable if employment ends after the date of matching.
Test Data
MW 06/04/2014
Date of Placement 14/05/2014
SAP Start date 14/05/2014
Employment start 01/01/2007
Employment ends 07/04/2014
Expected Result
Software allows SAP to be paid.
Paying SAP Test 3 and 4 SAP can start up to 14 days before expected DOP
This does not apply where adoption leave and pay is in connection with intended parents in surrogacy. In these cases it can only be taken from birth.
In the case of adoptions from overseas, leave can only be taken from when the child enters Great
Britain. www.gov.uk/adoption-pay-leave/leave
Test Description Test Data Expected Result
3) SAP can start up to two weeks in advance of expected date of placement
(DOP).
4) SAP cannot start more than two weeks in advance of expected date of placement (DOP).
Matching Week 06/04/2014
Expected DOP 14/05/2014
SAP start date 30/04/2014
Matching Week 06/04/2014
Expected DOP 14/05/2014
SAP start date 29/04/2014
Software allows SAP start date
Software does not allow a
SAP start date of 29/04/2014
Paying SAP Test 5 SAP start date later than date of placement
The SAP start date can be the day after the date of placement if the employee was at work on the same day the child was placed. If this is not the case the SAP start date must not be later than date of placement.
This is also the case for surrogacy cases where the intended parents are at work on the day the child is born. www.gov.uk/statutory-adoption-pay-employee-circumstances-that-affect-payment
Test Description Test Data Expected Result
5) The SAP start date can be the day after the date of placement if the employee was at work on the same day the child was placed
Matching Week: 06/04/2014
Date of Placement: 14/05/2014 but employee is at work that day therefore SAP start date
15/05/2014
Software allows a SAP start date of 15/05/2014
Paying SAP Tests 6 and 7 SR is payable when the ER > SR www.gov.uk/adoption-pay-leave/pay
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Test Description
6) Standard Rate of SAP is payable when the Earnings
Rate is more than the
Standard Rate of SAP.
7) Earnings Rate of SAP is payable when it is less than
Standard Rate.
Test Data
Matching Week: 06/04/2014
Expected Date of Placement:
14/05/2014
SAP start date 15/05/2014
Paid £1200 per month.
Average Weekly Earnings are
£276.92307
Earnings rate = AWE x 90% =
£249.23076 rounded up to
£249.24
Matching Week: 06/04/2014
Expected Date of Placement:
14/05/2014
SAP start date 15/05/2014
Paid £652.11 per month.
Average Weekly Earnings are
£150.48692
Earnings rate = AWE x 90% =
£135.43822 rounded up to
£135.44
Expected Result
Software pays Standard Rate of SAP (£138.18).
Software pays Earnings Rate of SAP (£135.44).
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Average Weekly Earnings (AWE)
An employee must have average weekly earnings at or above the Lower Earnings Limit (LEL) in the
MW to qualify for SAP. Use the LEL in force on the Saturday of the MW.
Employees paid other than weekly must have their average earnings converted to a weekly amount. The examples on the following pages show how to do this for different pay frequencies.
The average weekly earnings are calculated on the earnings paid within the Relevant Period (RP).
See examples below.
MONTHLY PAID
Example 1
Matching Week (MW) 28/09/14 - 04/10/14
Paid £472.33 on last day of each month
1
2
3
Date of placement
Find the Saturday of the MW
4
Find the date of the last normal payday on or before the Saturday of the MW. This is the last day of the relevant period.
Find the date of the payday at least eight weeks back from the date in 3 and come forward one day, for example if the payday is
22 June, enter 23 June. This is the first day of the relevant period.
7
8
9
5
6.
Add together the earnings paid between the dates at 4 and 3
(inclusive).
Work out how many whole months there are between the dates in
4 and 3 (inclusive). If there is not a whole number of months, see
Rounding to the nearest whole month when there isn’t a whole number of months in the relevant period
Divide the figure in 5 by the whole months in 6.
Multiply the figure at 7 by 12.
Divide the figure in 8 by 52.
Don’t round up or down to whole pence; use the unrounded amount to check if the employee’s AWE are high enough.
1
2
3
Example 2
Matching Week 28/09/14 - 04/10/14
Paid £463.66 on 15/07/14 and 30/09/14
4
Date of placement
Find the Saturday of the MW
Find the date of the last normal payday on or before the Saturday of the MW. This is the last day of the relevant period.
Find the date of the payday at least eight weeks back from the
5
6. date in 3 and come forward one day, for example if the payday is
22 June, enter 23 June. This is the first day of the relevant period.
Add together the earnings paid between the dates at 4 and 3
(inclusive).
Work out how many whole months there are between the dates in
4 and 3 (inclusive). If there is not a whole number of months, see
Rounding to the nearest whole month when there isn’t a whole
01/11/14
04/10/14
30/09/14
01/08/14
£944.66
2
£472.33
£5667.96
£108.99923
01/11/14
04/10/14
30/09/14
16/07/14
463.66
3 (RP contains 2 months and 16 days rounded up to 3)
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7
8
9
number of months in the relevant period
Divide the figure in 5 by the whole months in 6.
Multiply the figure at 7 by 12.
Divide the figure in 8 by 52.
Don’t round up or down to whole pence; use the unrounded amount to check if the employee’s AWE are high enough.
£154.55333
£1854.63996
£35.66615
To work out AWE for employees paid weekly or in multiples of a week, for example weekly, fortnightly, three weekly or other multiple weekly
WEEKLY PAID
1
2
3
4
Matching Week (MW) 05/10/14
Paid £111 on Fridays
Date of placement
Find the Saturday of the MW
Find the date of the last normal payday on or before the Saturday of the MW. This is the last day of the relevant period.
Count back to the payday that is at least eight weeks before the date in 3 and come forward one day, for example if the pay day is
5
6
22 June, enter 23 June. This is the first day of the relevant period.
Add together the earnings paid between the dates in 4 and 3
(inclusive).
Divide the figure in 5 by the no. of whole weeks in the relevant
Don’t round up or down to whole pence; use the unrounded amount to check if the employee’s AWE are high enough.
01/11/14
11/10/14
10/10/14
16/08/14
£888.00
£111.00000
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2 WEEKLY PAID
2
3
Matching Week (MW) 12/10/14
Paid £222.01 on Fridays
Last paid on 17/10/2014
1 Date of placement
Find the Saturday of the MW
4
Find the date of the last normal payday on or before the
Saturday of the MW. This is the last day of the relevant period.
Count back to the payday that is at least eight weeks before the
5
6 date in 3 and come forward one day, for example if the pay day is 22 June, enter 23 June. This is the first day of the relevant period.
Add together the earnings paid between the dates in 4 and 3
(inclusive).
Divide the figure in 5 by the no. of whole weeks in the relevant
Don’t round up or down to whole pence; use the unrounded amount to check if the employee’s AWE are high enough.
01/11/14
18/10/14
17/10/14
23/08/14
£888.04
£111.00500
4 WEEKLY PAID
Matching Week (MW) 26/10/14
Paid £489 on Wednesdays
Last paid on 22/10/14
1
2
Date of placement
Find the Saturday of the MW
3
4
Find the date of the last normal payday on or before the
Saturday of the MW. This is the last day of the relevant period.
Count back to the payday that is at least eight weeks before the date in 3 and come forward one day, for example if the pay day is 22 June, enter 23 June. This is the first day of the relevant
5
6 period.
Add together the earnings paid between the dates in 4 and 3
(inclusive).
Divide the figure in 5 by the no. of whole weeks in the relevant
Don’t round up or down to whole pence; use the unrounded amount to check if the employee’s AWE are high enough.
01/11/14
01/11/14
22/10/14
28/08/14
£978.00
£122.25000
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IRREGULARLY PAID
Matching Week (MW) 19/10/14
Payments
15/08/14
05/0914
23/1014
25/10/14
£483.20
£813.00
£970.00
£650.83
1
2
Date of Placement
Find the Saturday of the MW
3.
4.
Find the date of the last normal payday on or before the Saturday of the MW. This is the last day of the relevant period.
Count back to the payday at least eight weeks from the date in 3 and come forward one day. For example, if the pay day is 22
June, enter 23 June.
This is the first day of the relevant period.
5
6
7
8
Add together the earnings paid between the dates at 4 and 3
(inclusive).
Work out the number of days between the dates in 4 and 3
(inclusive).
Divide the figure in 5 by the number of days in 6
Multiply the figure at 7 by 7.
Don’t round up or down to whole pence; use the unrounded amount to check if the employee’s AWE are high enough.
01/11/14
25/10/14
25/10/14
16/08/14
£2433.83
71
£34.27929
£239.95503
Rounding to the nearest whole month when there isn’t a whole number of months in the relevant period
Count the number of odd days and round as follows:
• February, round 14 days or less down and 15 days or more up
• Any month except February, round 15 days or less down and 16 days or more up.
It is the calendar month in which the last day of the relevant period falls, that determines the month for rounding.
Examples:-
1) RP runs from 21/11/2013 and ends on 04/02/14,
There are 2 months and 15 days in the RP
Each month runs from 21 st to the 20 th of the following month.
The month in which the last day of the RP falls determines what rounding rule to use.
In this example the last day falls in February and there are 15 days from the end of the previous month (20/01/13) up to and including 04/02/13.
The February rounding rule applies and the 15 days is rounded up to another full month.
There are 3 months in the RP.
2) RP runs from 01/06/13 to 15/08/13
There are 2 months and 15 days in the RP.
The RP ends in August so the 15 days are rounded down in this case and there are 2 months in the
RP.
Rounding of the AWE figure
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An unrounded figure is required to determine if the earnings are ≥ the LEL and this data should be held truncated at 5 decimal places.
Circumstances which can affect the AWE calculation
The standard AWE calculation can be affected by many variations which may make it difficult to automate all possible scenarios. Where the software does not automate all scenarios it is recommended that the user is able to amend the figure calculated by the software.
Mistimed Payments
Sometimes earnings are paid early or late which can distort the average weekly earnings figure. For example the relevant period might be 8 weeks long but 9 weeks ’ pay were actually received within that 8 week period. In these cases the number pay periods used in the calculation should reflect the number of weeks/months of pay received.
Overpaid/underpaid earnings during the relevant period
Calculation of AWE is always based on all earnings actually paid within the relevant period, regardless of any overpayment or underpayment of wages made in that period.
This may mean an employee is eligible for SAP even if their AWE would otherwise have been below the Lower Earnings Limit (LEL), or they may not qualify for SAP where an underpayment of wages means their AWE falls below the LEL.
Salary sacrifice
If an employee has entered into a salary sacrifice their AWE is calculated using the amount of earnings actually paid to them after the salary sacrifice during the relevant period.
Employee has more than one job with the employer
If the employees earnings are normally added together to work out Class 1 National Insurance contributions (NICs) they will be added together to work out the employee’s AWE, and the employee can only get one lot of SAP.
If Class 1 NICs are worked out separately on the employee’s earnings, then the AWE must be worked out separately, and the employee can get more than one lot of SAP.
Contractual benefits
For the purposes of calculating AWE for SAP, the calculation is based on earnings which are subject to NICs. Therefore do not include the value of any benefits which are exempt from Class 1
NICs (such as some childcare vouchers) in the AWE calculation.
Earnings in the relevant period affected by a backdated pay rise
If the employee’s entitlement to SAP is less than the standard rate, and they get a backdated pay rise which increases the amount of earnings already paid in the relevant period the AWE must be recalculated and the extra SAP paid.
If the employee was not entitled to SAP and receives a backdated pay rise which increases the amount of earnings already paid in the relevant period, the AWE must be recalculated to check if they may now be entitled.
What counts as earnings?
Use the amount actually paid before deductions such as PAYE, NICs and pension contributions.
AWE should include all earnings that attract a Class 1 NICs liability, or would if they were high enough. Such earnings would consist of:
Any salary or wages (including cash allowances – for example, car allowance) and money paid in the period earned outside the relevant period, such as holiday pay, overtime and lump sums paid for arrears of pay
Any other element of the person’s earnings which is chargeable to Class 1 NICs (including in very limited circumstances Class 1B)
Shares or share options
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Retail and other vouchers (where the cost is taxable under the P11D procedure and subject to
Class 1 NICs)
Statutory Sick Pay
Statutory Maternity Pay
Ordinary Statutory Paternity Pay and Additional Statutory Paternity Pay
Statutory Adoption Pay
Shared Parental Pay
Recovery of SAP
Recovery of SAP mirrors the current arrangements for the other statutory payments (except SSP).
The first stage is to establish which rate of recovery applies to the employer.
If you were an employer for the whole of the tax year before the MW
1. Find the matching date
2. Find the date of the Sunday on or before the Matching date (Matching Week Sunday)
3. Identify the last complete tax year before the MW Sunday (the Qualifying Year)
4. Total your class 1 NICs liability for that year
If the figure in 4 is £45,000 or less you are entitled to:
• 100% of the SAP, and
• 3% as compensation for the NICs you pay on the SAP.
If the figure in 4 is more than £45,000 you are entitled to 92% of the SAP.
If you were not an employer for the whole of the tax year before the MW
1. Find the matching date
2. Find the date of the Sunday on or before the Matching date (Matching Week Sunday)
3. Identify the tax year before the MW Sunday
4. Add together your total Class 1 NICs for the tax months in that year.
5. Work out the number of tax months you were an employer in that year. Count part months as whole months and remember that tax months run from the 6th of one month to the 5 th of the following month.
6. Divide the figure in 4 by the number of months in 5.
7. Multiply the figure in 6 by 12.
If the figure in 7 is £45,000 or less you are entitled to:
• 100% of the SAP, and
• 3% as compensation for the NICs you pay on the SAP.
If the figure in 4 is more than £45,000 you are entitled to 92% of the SAP.
If you were not an employer in the tax year before the MW
1. Find the matching date.
2. Find the date of the Sunday on or before the Matching date (Matching Week Sunday)
3. Identify the tax year in which the MW Sunday falls.
4. Identify the tax month before the Matching Week Sunday. Remember that tax months run from the 6th of one month to the 5th of the following month.
5. Add together your liability for Class 1 NICs between the start of the tax year you identified at 3, or the first tax month for which you were liable for Class 1 NICs, and the tax month you identified at 4, inclusive.
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6. Work out the number of tax months between the start of the tax year you identified at 3, or the first tax month for which you were liable for Class 1 NICs, and the tax month you identified at 4, inclusive.
7. Divide the figure in 5 by the number of whole months in 6.
8. Multiply the figure at 7 by 12.
If the figure in 8 is £45,000 or less you are entitled to:
• 100% of the SAP, and
• 3% as compensation for the NICs you pay on the SAP.
If the figure in 8 is more than £45,000 you are entitled to 92% of the SAP.
The second stage is to calculate the recovery amounts.
Multiply the amount of SAP paid in a tax month by appropriate percentage rate(s) as shown in tables above. The period of entitlement to which the payment relates is not relevant to the recovery calculation. It is only concerned with the total amount of SAP payment(s) paid in that tax month.
The result should be rounded up to the nearest penny.
The calculation should be performed and rounded separately for each tax month.
Recovery tests 1 and 2
Test Description Test Data
1) SAP must be recovered at the correct rate. For this test only complete weeks of SAP are paid within the pay period.
Test: Employers who do not qualify for Small Employers
Relief.
This employee is paid £511.25 monthly on the last day of the month.
AWE £117.98076
SAP Payable is 117.98076 x 90%
= 106.18268 rounded up to
£106.19 per week.
MW 27/04/2014
Date of Placement 14/05/2014
SAP 14/05/2014 - 10/02/2015
39 x £106.19 = £4141.41
Expected Result
Employers can recover 92% of SAP paid.
For this test only complete weeks of SAP within the pay period are paid. Software calculates recovery of:
May (2 weeks) =£195.39
June (4 weeks) =£390.78
July (5 weeks) =£488.48
Aug (4 weeks) =£390.78
Sept (5 weeks) =£488.48
Oct (4 weeks) =£390.78
Nov (4 weeks) =£390.78
Dec (5 weeks) =£488.48
Jan (4 weeks) =£390.78
Feb (2 weeks) =£195.39
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2) SAP must be recovered at the correct rate. For this test only complete weeks of SAP are paid within the pay period.
Test: Employers who do qualify for Small Employers
Relief.
This employee is paid £511.25 monthly on the last day of the month.
AWE £117.98076
SAP Payable is 117.98076 x 90%
= 106.18268 rounded up to
£106.19 per week.
MW 27/04/2014
Date of Placement 14/05/2014
SAP 14/05/2014 - 10/02/2015
39 x £106.19 = £4141.41
Employers can recover 100% of SAP paid plus an additional 3%
For this test only complete weeks of SAP within the pay period are paid. Software calculates recovery of:
May (2 weeks) =£218.76
June (4 weeks) =£437.51
July (5 weeks) =£546.88
Aug (4 weeks) =£437.51
Sept (5 weeks) =£546.88
Oct (4 weeks) =£437.51
Nov (4 weeks) =£437.51
Dec (5 weeks) =£546.88
Jan (4 weeks) =£437.51
Feb (2 weeks) =£218.76
Part Week Payments
Calculation of part week payments mirrors the current arrangements for the other statutory payments.
Entitlement to SAP is always in full weeks but payment of these weeks can be divided across pay periods where the SAP weeks do not match with the pay period start or end dates. This functionality is optional but if included the weeks of SAP should be divided as follows.
Take the weekly rate of SAP and multiply by the number of days in the part-week, then divide by 7 truncated to 5 decimal places and round up to nearest penny above [Do not calculate a rounded daily rate].
The balance of any remaining part week payment should be paid in the following pay period.
Example:-
Weekly rate of SAP £138.18
SAP weeks run from Wed-Tues
A monthly paid employee paid on the last day of each month.
The monthly SAP payment for July 2015 would consist of 4 full weeks of SAP and 3 days.
4 x £138.18 = £552.72 PLUS part week payment of (138.18 x 3) / 7 = £59.22 (for 29/07/15 –
31/07/15)
Total SAP payment for July = £611.94
The remaining part week payment for SAP week 29/07/15 – 04/08/15 is (138.18 x 4) / 7 = £78.96 and is added to any other payments of SAP that are due in August.
Annual up-rating
Updates to the weekly rate of SAP for the coming tax year are usually announced around the time of the Autumn Budget Statement. Any changes would come into effect for SAP weeks beginning on or after the first Sunday in the following April.
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Common Data Items and validation checks
Below is a list of the data items and validation checks that we expect most developers would use as part of their solution based on the requirements in this document. The list is not mandatory or exhaustive and is included as a guide only.
SAP
Standard weekly rate of SAP
£138.18 for 13/14
Standard rate of SAP (SR)
£138.18 for 14/15 tax year
Earnings rate of SAP (ER)
90% of AWE.
Round all fractions of a penny up the next penny above.
Number of continuous weeks of employment needed to qualify for SAP.
26
Saturday of the MW.
Used in the 26 week employment check and in working out the relevant period for calculating average weekly earnings.
Employment start date
Used to determine SAP entitlement via 26 week employment rule
The maximum no. of weeks SAP can be paid for.
39. Must be > 1 and < 39
Start date of Adoption Pay Period (APP)
The APP can start on any day of the week.
End date of APP
Must be < (APP start date + 39 weeks)
Matching date
The date when a certificate matching the child with a family is issued – as self certified by the employee.
Matching week
The week beginning on the Sunday on or before matching date.
Placement date
Date the child is placed for adoption.
Employment end date
No entitlement to SAP if employment end date < first day of the MW.
Average weekly earnings (AWE)
Weekly Lower Earnings Limit (LEL)
The LEL for NI contribution purposes and the minimum level of average weekly earnings for SAP entitlement to arise.
£111 for 14/15
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The average weekly earnings of the employee.
Should not be rounded – truncate at 5 decimal places.
Date of first pay day on or before the Saturday of MW
This is the end date of the Relevant Period (RP) for calculating average weekly earnings
Date eight weeks before the end of RP
This is the date 8 weeks before date above.
Date of first pay day on or before date eight weeks before the end of RP
Start date of RP
The day after date above
Number of days in the RP
Number of days from Start date of RP to end date of RP (inclusive)
Sum of the gross NI able earnings paid in the RP
Weekly divisor
No. of whole weeks in the relevant period (RP).
Used when employee paid weekly or in multiples of a week.
Calculated as Days in RP divided by 7 rounded down to a whole number.
May need to be overwritten in cases of Mistimed Payments
Monthly divisor
No. of whole calendar months in relevant period (RP).
Used when employee paid monthly or in multiples of a calendar month.
May need to be overwritten in cases of Mistimed Payments
Where there are not a whole number of months in the RP round to a whole number of months as follows:-
Count the number of odd days and round as follows:
• February, round 14 days or less down and 15 days or more up
• Any month except February, round 15 days or less down and 16 days or more up.
The employees AWE
Held truncated at 5 decimal places
Recovery
Qualifying year
The tax year used to establish the percentage recovery rate.
It is the last complete tax year before the Saturday of the employee’s Qualifying or Matching Week.
Class 1 NICs Threshold to determine recovery rate of SAP
£45,000
See Recovery tests for more information
Recovery rate where Class 1 NICs liability < £45,000
100%
See Recovery tests for more information
Compensation rate where Class 1 NICs liability < £45,000
3%
See Recovery tests for more information
Standard Recovery rate
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92%
Applicable wher e liability to Class 1 NICs > £45,000
See Recovery tests for more information
Class 1 NICs liability
Gross Primary & Secondary Class 1 NIC liability for the used to determine the appropriate percentage recovery rate. Liability is net of any contracted-out rebate due for that tax year even if not actually claimed. Do not include Class 1A or Class 1B NICs.
Total SAP paid in a tax month
The amount of SAP paid in a tax month.
The period of entitlement to which the payment relates is not relevant to the recovery calculation. It is only based on the payments received in a tax month.
Keep In Touch days
Keep In Touch day
Must be > APP start date and < APP end date.
Up to a max of 10.
Any further days above 10 worked during the Adoption Pay Period (APP) will result in the end of adoption leave and pay
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