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Too much red tape is preventing many small businesses from reclaiming the Statutory Maternity Pay they provide to their employees. This is the conclusion drawn from a report which showed that less than 16% of SMEs had reclaimed maternity pay back from the Government..

The findings cropped up in the Forum of Private Business's (FPB) latest Quarterly Survey. The survey carried many questions on parental leave, mostly due to the Government's proposals to give new fathers a fortnight's paid paternity leave.

In response to the findings, Dave Harrop, press spokesperson at the FPB said "The prime aim of a small business is to run a profitable business. There are two reasons why they don't claim: there is a lack of awareness they can, and the time and complexity involved. The FPB is striving to raise awareness that it is available, but is also calling on the government to simplify the process."

Currently small employers - those whose gross Class 1 National Insurance contributions in the last complete tax year add up to Ł20,000 or less - qualify for 100% relief plus 5% extra to cover administration costs. All other firms only receive 92% of the statutory maternity pay which they pay out. The Government is currently considering doubling the Ł20,000 National Insurance liability threshold.

The survey also revealed that 54% of owners "disagree with the principle of paternity leave." At present there is a perception that the smallest firms in the economy would be affected most. For instance, those with between one and four employees, would probably struggle in the short term if they lost an employee for two weeks - regardless of whether they could claim the cash back. Businesses which employed husband and wife teams feared the double impact from both paternity and maternity leave.

To find out more about Statutory Maternity Pay and how to reclaim it, either visit the Inland Revenue's website at www.inlandrevenue.gov.uk or phone the Employer's Helpline on 08457-143143.

A copy of the survey is available for Ł15 from the Forum of Private Business. To reserve a copy, phone 020-7222 7133.

With thanks to Lloyds TSB Success4Business. For more news and information visit www.success4business.com .

(20/6/01)

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