The Statutory Neonatal Care Pay (Administration) Regulations 2025
These regulations outline the administrative procedures for the UK's statutory neonatal care pay.
They detail employer entitlement to reimbursement (92% of payments, or 100% for small employers), application processes for funding, authorized deductions from employer payments to HMRC, procedures for handling overpayments, employer record-keeping requirements, and information provisions for employees.
The regulations also cover inspection of employer records by HMRC officers, dispute resolution mechanisms and information requests related to entitlement.
Arguments For
Improved support for parents: The regulations aim to provide financial support to parents during a crucial period following the birth of a newborn child requiring neonatal care, supporting parental well-being and economic stability.
Simplified administration: The regulations aim to streamline the process of administering statutory neonatal care pay, making it easier for both employers and employees to navigate the system and reduce administrative burdens. The inclusion of advance funding and deduction mechanisms could ease financial strain for employers.
Legal basis in existing legislation: The regulations derive their authority from existing legislation like Employment Act 2002 and Social Security Contributions (Transfer of Functions, etc.) Act 1999, providing a solid legal framework for implementation.
Fair and equitable system: The regulations intend to establish a transparent approach to payment of statutory neonatal care pay, addressing potential discrepancies and ensuring a consistent application of policy across different employment contexts and employer sizes.
Arguments Against
Potential administrative compliance challenges: Businesses, particularly SMEs, may encounter difficulties in adhering to the new administrative requirements, which could cause compliance issues and necessitate significant resource allocation to maintain accurate records and meet reporting obligations.
Funding mechanism complexities: The funding mechanism involving deductions may create complexities and delays in accessing reimbursements, impacting both employer and employee cash flow. There's an inherent risk of miscalculation and subsequent disputes.
Limited scope of relief for some employers: While small employment relief is included, the 92% funding rate may not adequately compensate larger businesses, especially if they face higher administrative overhead or experience a high volume of neonatal care pay claims. This could disproportionately affect particular sectors or employment models.
Unintended consequences: The precise impact on employer behavior and employment patterns following implementation will require careful monitoring to ensure the regulations deliver intended benefits without provoking unintended repercussions, such as discouraging employment or hindering business growth in affected sectors.
The Secretary of State makes these Regulations in exercise of the powers conferred by sections 7, 8, 10 and 51(1) of the Employment Act 2002[1] and sections 8(1)(f) and (ga) and 25(3) and (6) of the Social Security Contributions (Transfer of Functions, etc.) Act 1999[2] with the concurrence of the Commissioners of His Majesty’s Revenue and Customs[3].
- Citation, commencement and extent (1) These Regulations may be cited as the Statutory Neonatal Care Pay (Administration) Regulations 2025. (2) These Regulations come into force on 6th April 2025. (3) These Regulations extend to England and Wales and Scotland.
The Secretary of State created these regulations using powers from the Employment Act 2002 and the Social Security Contributions Act 1999, with agreement from HMRC. The regulations are titled the Statutory Neonatal Care Pay (Administration) Regulations 2025, come into effect on April 6th, 2025, and apply to England, Wales, and Scotland.
- Interpretation (1) In these Regulations— “the 1992 Act” means the Social Security Contributions and Benefits Act 1992[4]; “the Commissioners” means the Commissioners for HMRC; “contributions payments” has the same meaning as in section 7 of the Employment Act 2002; “HMRC” means His Majesty’s Revenue and Customs; “income tax month” means the period beginning on the 6th day of any calendar month and ending on the 5th day of the following calendar month; “income tax quarter” means the period beginning on— (a) the 6th day of April and ending on the 5th day of July; (b) the 6th day of July and ending on the 5th day of October; (c) the 6th day of October and ending on the 5th day of January; or (d) the 6th day of January and ending on the 5th day of April; “partner” has the same meaning as in the Statutory Neonatal Care Pay (General) Regulations 2025; “statutory neonatal care pay” means statutory neonatal care pay payable in accordance with the provisions of Part 12ZE of the 1992 Act; “tax year” means the 12 months beginning with 6th April in any year; “writing” includes writing delivered by means of electronic communications to the extent that the electronic communications are approved by directions issued by the Commissioners pursuant to regulations under section 132 of the Finance Act 1999[5]. (2) Any reference in these Regulations to the employees of an employer includes the employer’s former employees.
This section defines key terms used in the regulations. '1992 Act' refers to the Social Security Contributions and Benefits Act 1992; 'Commissioners' means HMRC Commissioners; 'contributions payments' is defined as in the Employment Act 2002; 'HMRC' refers to His Majesty's Revenue and Customs; 'income tax month' and 'income tax quarter' define specific time periods; 'partner' is as defined in the Statutory Neonatal Care Pay (General) Regulations 2025; 'statutory neonatal care pay' refers to payments under Part 12ZE of the 1992 Act; 'tax year' is the period from April 6th to the following April 5th; and 'writing' includes approved electronic communications.
References to employees also include former employees.
- Funding of employers’ liabilities to make payments of statutory neonatal care pay (1) An employer who has made any payment of statutory neonatal care pay is entitled— (a) to an amount equal to 92% of such payment, or (b) if the payment qualifies for small employer’s relief by virtue of section 7(3) of the Employment Act 2002— (i) to an amount equal to such payment, and (ii) to an additional payment equal to the amount to which the employer would have been entitled under section 167(2)(b) of the 1992 Act[6] had the payment been a payment of statutory maternity pay. (2) The employer will be entitled to apply for advance funding in respect of any such payment in accordance with regulation 4, or to deduct it in accordance with regulation 5 from amounts otherwise payable by the employer.
Employers who make statutory neonatal care pay payments are entitled to reimbursement.
Generally, this is 92% of the payment.
Small employers, as defined in section 7(3) of the Employment Act 2022, receive 100% reimbursement, plus an additional payment equivalent to what they would receive under section 167(2)(b) of the 1992 Act for statutory maternity pay.
Employers can apply for advance funding (regulation 4) or deduct the reimbursement from other payments to HMRC (regulation 5).
- Applications for funding from the Commissioners (1) An employer may apply to the Commissioners for funds to pay the statutory neonatal care pay (or so much of it as remains outstanding) to the employee or employees in a form approved for that purpose by the Commissioners where— (a) the conditions in paragraph (2) are satisfied, or (b) the condition in paragraph (2)(a) is satisfied and the employer considers that the condition in paragraph (2)(b) will be satisfied on the date of any subsequent payment of emoluments to one or more employees who are entitled to payment of statutory neonatal care pay. (2) The conditions in this paragraph are— (a) the employer is entitled to a payment determined in accordance with regulation 3 in respect of statutory neonatal care pay which the employer is required to pay to an employee or employees for an income tax month or income tax quarter, and (b) the payment exceeds the aggregate of— (i) the total amount of tax which the employer is required to pay to HMRC in respect of the deduction from the emoluments of employees in accordance with the Income Tax (Pay as You Earn) Regulations 2003[7] for the same income tax month or income tax quarter, (ii) the total amount of the deductions made by the employer from the emoluments of employees for the same income tax month or income tax quarter in accordance with regulations under section 22(5) of the Teaching and Higher Education Act 1998[8] or under section 73B(3) of the Education (Scotland) Act 1980[9] or in accordance with article 3(5) of the Education (Student Support) (Northern Ireland) Order 1998[10], (iii) the total amount of contributions payments which the employer is required to pay to HMRC in respect of the emoluments of employees (whether by means of deduction or otherwise) in accordance with the Social Security (Contributions) Regulations 2001[11] for the same income tax month or income tax quarter, and (iv) the total amount of payments which the employer is required to pay to HMRC in respect of the deductions made on account of tax from payments to sub-contractors in accordance with section 61 of the Finance Act 2004[12] for the same income tax month or income quarter. (3) An application by an employer under paragraph (1) may be for an amount up to, but not exceeding, the amount of the payment to which the employer is entitled in accordance with regulation 3 in respect of statutory neonatal care pay which the employer is required to pay to an employee or employees for the income tax month or income tax quarter to which the payment of emoluments relates.
Employers can apply to HMRC for funding to pay statutory neonatal care pay.
An application is made using an HMRC-approved form.
The application is permitted if either: the conditions in paragraph (2) are met; or the condition in paragraph (2)(a) is met, and the employer believes that the condition in paragraph (2)(b) will be met when future employee payments are made.
Paragraph (2) sets out the conditions for an application: payments are due; and the reimbursement exceeds the total tax, deductions, or contributions due to HMRC. The application can be for up to the amount the employer is entitled to under regulation 3.
- Deductions from payments to the Commissioners An employer who is entitled to a payment determined in accordance with regulation 3 may recover such payment by making one or more deductions from the aggregate of the amounts specified in sub-paragraphs (i) to (iv) of regulation 4(2)(b) except where and in so far as— (a) those amounts relate to earnings paid before the beginning of the income tax month or income tax quarter in which the payment of statutory neonatal care pay was made, (b) those amounts are paid by the employer later than six years after the end of the tax year in which the payment of statutory neonatal care pay was made, (c) the employer has received payment from the Commissioners under regulation 4, or (d) the employer has made a request in writing under regulation 4 that the payment to which the employer is entitled in accordance with regulation 3 be paid and the employer has not received notification by the Commissioners that the request is refused.
Employers can recover their reimbursement by deducting it from payments they would otherwise make to HMRC, specifically the amounts listed in regulation 4(2)(b).
They cannot deduct from earnings paid before the relevant income tax month or quarter, from amounts paid more than six years after the tax year, if HMRC has already paid them, or if a funding request under regulation 4 is pending.
- Payments to employers by the Commissioners The Commissioners must pay the employer such amount as the employer was unable to deduct where— (a) the Commissioners are satisfied that the total amount which the employer is or would otherwise be entitled to deduct under regulation 5 is less than the payment to which the employer is entitled in accordance with regulation 3 in an income tax month or income tax quarter, and (b) the employer has in writing requested the Commissioners to do so.
If an employer cannot fully recover their reimbursement through deductions (regulation 5), HMRC must pay the remaining amount if the employer requests it in writing.
- Date when certain contributions are to be treated as paid Where an employer has made a deduction from a contributions payment under regulation 5, the date on which it is to be treated as having been paid for the purposes of subsection (5) of section 7 (funding of employers’ liabilities) of the Employment Act 2002 is— (a) in a case where the deduction did not extinguish the contributions payment, the date on which the remainder of the contributions payment or, as the case may be, the first date on which any part of the remainder of the contributions payment was paid, and (b) in a case where the deduction extinguished the contributions payment, the 14th day after the end of the income tax month or income tax quarter during which there were paid the earnings in respect of which the contributions payment was payable.
This section clarifies the date when contributions are considered paid if an employer made a deduction under regulation 5.
If the deduction didn't fully cover the contributions, the date is when the remaining amount was paid.
If the deduction covered the whole amount, then the date is 14 days after the income tax month or quarter when the earnings were paid.
- Overpayments (1) This regulation applies where funds have been provided to the employer pursuant to regulation 4 in respect of one or more employees and it appears to an officer of Revenue and Customs that the employer has not used the whole or part of those funds to pay statutory neonatal care pay. (2) An officer of Revenue and Customs must decide to the best of the officer’s judgement the amount of funds provided pursuant to regulation 4 and not used to pay statutory neonatal care pay and must serve notice in writing of this decision on the employer. (3) A decision under this regulation may cover funds provided pursuant to regulation 4— (a) for any one income tax month or income tax quarter, or more than one income tax month or income tax quarter, in a tax year, and (b) in respect of a class or classes of employees specified in the decision notice (without naming the individual employees), or in respect of one or more employees named in the decision notice. (4) Subject to the following provisions of this regulation, Part 6 of the Taxes Management Act 1970 (collection and recovery)[13] applies with any necessary modifications to a decision under this regulation as if it were an assessment and as if the amount of funds determined were income tax charged on the employer. (5) Where an amount of funds determined under this regulation relates to more than one employee, proceedings may be brought for the recovery of that amount without distinguishing the amounts making up that sum which the employer is liable to repay in respect of each employee and without specifying the employee in question, and the amount determined under this regulation will be one cause of action or one matter of complaint for the purposes of proceedings under sections 65, 66 or 67 of the Taxes Management Act 1970[14]. (6) Nothing in paragraph (5) prevents the bringing of separate proceedings for the recovery of any amount which the employer is liable to repay in respect of each employee.
This regulation deals with situations where an employer receives funds under regulation 4 but doesn't use them to pay statutory neonatal care pay.
An HMRC officer determines the misused amount and notifies the employer in writing.
This decision might cover multiple time periods or employee groups.
Part 6 of the Taxes Management Act 1970 applies, treating the misuse as an income tax assessment.
Recovery proceedings can be brought without specifying individual employees, though separate proceedings remain possible per employee.
- Records to be kept by employers (1) Subject to paragraphs (2) and (3), every employer must maintain a record of— (a) in relation to an employee’s period of payment of statutory neonatal care pay— (i) the date on which that period began, (ii) the evidence of entitlement to statutory neonatal care pay provided by the employee pursuant to regulations made under section 171ZZ17(4)(f) of the 1992 Act[15], and (iii) any week which was within a period of payment of statutory neonatal care pay but for which no payment of statutory neonatal care pay was made to the employee and the reason no payment was made; and (b) the weeks in which such payments were made and the amount paid in each week. (2) The records in paragraph (1)(a) must be maintained for a period of three years after the end of the tax year in which the employee’s period of payment of statutory neonatal care pay began. (3) The records in paragraph (1)(b) must be maintained for a period of three years after the end of the tax year in which the employer made payments of statutory neonatal care pay to the employee. (4) In this regulation, “period of payment of statutory neonatal care pay” means each week in respect of which statutory neonatal care pay is payable to a person under section 171ZZ19(2) of the 1992 Act.
Employers must keep records of statutory neonatal care pay.
These include the start date of the payment period, employee entitlement evidence, any unpaid weeks and reasons, and payment amounts for each week.
The records must be retained for three years after the end of the relevant tax year.
- Inspection of employers’ records (1) An employer must produce the documents and records specified in paragraph (2) to an authorised officer of Revenue and Customs for inspection, at such time as that officer may reasonably require, at the prescribed place. (2) The documents and records specified in this paragraph are— (a) all wage sheets, deductions working sheets, records kept in accordance with regulation 9 and other documents relating to the calculation or payment of statutory neonatal care pay to employees in respect of the years specified by such officer, or (b) such of those wages sheets, deductions working sheets, or other documents and records as may be specified by the authorised officer. (3) The “prescribed place” mentioned in paragraph (1) means— (a) such place in Great Britain as the employer and the authorised officer may agree upon, or (b) in default of such agreement, the place in Great Britain at which the documents and records referred to in paragraph (2)(a) are normally kept, or (c) in default of such agreement and if there is no such place as is referred to in sub-paragraph (b), the employer’s principal place of business in Great Britain. (4) The authorised officer may— (a) take copies of, or make extracts from, any document or record produced to the authorised officer for inspection in accordance with paragraph (1), and (b) remove any document or record so produced if it appears to the authorised officer to be necessary to do so, at a reasonable time and for a reasonable period. (5) Where any document or record is removed in accordance with paragraph (4)(b), the authorised officer must provide— (a) a receipt for the document or record so removed, and (b) a copy of the document or record, free of charge, within seven days, to the person by whom it was produced or caused to be produced where the document or record is reasonably required for the proper conduct of business. (6) Where a lien is claimed on a document produced in accordance with paragraph (1), the removal of the document under paragraph (4)(b) will not be regarded as breaking the lien. (7) Where records are maintained by computer, the person required to make them available for inspection must provide the authorised officer with all facilities necessary for obtaining information from them.
HMRC officers can inspect employers' records relating to statutory neonatal care pay payments.
Employers must provide these records at a mutually agreed upon location or at their main business location.
Officers can take copies or remove records, providing a receipt and free copy within seven days if needed for business operations.
Removing documents won’t break any existing liens.
If records are electronic, employers must provide access to the information.
- Provision of information relating to entitlement to statutory neonatal care pay (1) An employer must provide details to the employee of a decision that the employer has no liability to make payments of statutory neonatal care pay to the employee and the reason for it where the employer— (a) has been given evidence of entitlement to statutory neonatal care pay pursuant to regulations made under section 171ZZ17(4)(f) of the 1992 Act, and (b) decides that they have no liability to make payments of statutory neonatal care pay to the employee. (2) An employer must provide to the employee the information specified in paragraph (3) where the employer— (a) has made one or more payments of statutory neonatal care pay to the employee, but (b) decides that they have no liability to make further payments to the employee because the employee has been detained in legal custody or sentenced to a term of imprisonment which was not suspended. (3) The information specified in this paragraph is— (a) details of the employer’s decision and the reasons for it, and (b) details of the week in respect of which a liability to pay statutory neonatal care pay arose. (4) The employer must— (a) return to the employee any evidence provided by the employee as referred to in paragraph (1) or (2), (b) comply with the requirements imposed by paragraph (1) within 28 days of the day the employee gave evidence of entitlement to statutory neonatal care pay pursuant to regulations made under section 171ZZ17(4)(f) of the 1992 Act, and (c) comply with the requirements imposed by paragraph (2) within seven days of being notified of the employee’s detention or sentence.
Employers must inform employees of decisions not to pay statutory neonatal care pay, including reasons.
This applies if the employer received entitlement evidence but decided against payment, or if payments stopped due to imprisonment.
The employer must inform the employee of their decision and affected week(s) within 28 or 7 days, respectively, and return the evidence.
- Decision on any issue arising as to, or in connection with, entitlement to statutory neonatal care pay Any issue arising as to, or in connection with, entitlement to statutory neonatal care pay may be decided by an officer of Revenue and Customs— (a) on their own initiative, or (b) on the basis of an application submitted by the employee concerned.
HMRC officers can resolve disputes about statutory neonatal care pay entitlement, either proactively or based on employee applications.
- Applications in connection with statutory neonatal care pay (1) An application for the determination of any issue referred to in regulation 12 must be made in a form approved for the purpose by the Commissioners. (2) Where such an application is made by an employee, it must— (a) be submitted to an officer of Revenue and Customs within a period of six months beginning with the first day of the period in respect of which the determination of that issue is sought, (b) state the period in respect of which entitlement to statutory neonatal care pay is in issue, and (c) state the grounds (if any) on which the applicant’s employer had denied liability for statutory neonatal care pay in respect of the period specified in the application.
Applications to resolve any entitlement disputes (regulation 12) must be made using an approved form.
Employee applications must be submitted within six months of the start of the disputed period and should specify the period and employer reasons for denial (if applicable).
- Provision of information (1) Where an officer of Revenue and Customs— (a) reasonably requires information or documents from a person specified in paragraph (2) to ascertain whether statutory neonatal care pay is or was payable, and (b) gives notification to that person requesting such information or documents, that person must provide that information within 30 days of receiving the notification. (2) The requirement to provide such information or documents applies to— (a) any person claiming to be entitled to statutory neonatal care pay; (b) any person who is, or has been, the spouse, civil partner or partner of such a person as is specified in sub-paragraph (a); (c) any person who is, or has been, an employer of such a person as is specified in sub-paragraph (a); (d) any person carrying on an agency or other business for the introduction or supply of persons available to do work or to perform services to persons requiring them; (e) any person who is a servant or agent of any such person as is specified in sub-paragraphs (a) to (d).
HMRC officers can require information or documents from various individuals to determine statutory neonatal care pay eligibility.
This includes claimants, their partners, employers, employment agencies, and related agents.
The information must be provided within 30 days of the request.
Justin Madders Parliamentary Under Secretary of State Department for Business and Trade at 10.30 a.m. on 24th February 2025 Jim Harra Myrtle Lloyd Two of the Lords Commissioners of His Majesty's Revenue and Customs 21st February 2025
These are the signatures and titles of the individuals who authorized these regulations.
EXPLANATORY NOTE (This note is not part of the Regulations) These Regulations provide for the funding of employers’ liabilities to make payments of statutory neonatal care pay; they also impose obligations on employers in connection with such payments and confer powers on the Commissioners for His Majesty’s Revenue and Customs (“the Commissioners”). Under regulation 3, an employer is entitled to an amount equal to 92% of payments made by the employer of statutory neonatal care pay, or the whole of such payments if the employer is a small employer. Regulations 4 to 7 provide for employers to be reimbursed through deductions from income tax, national insurance and other payments that they would otherwise make to the Commissioners, and for the Commissioners to fund payments to the extent that employers cannot be fully reimbursed in this way. Regulation 8 enables the Commissioners to recover overpayments to employers. Regulation 9 requires employers to maintain records relevant to the payment of statutory neonatal care pay to employees or former employees, and regulation 10 empowers officers of Revenue and Customs to inspect, copy or remove employers’ payment records. Regulation 11 requires an employer who decides not to make any, or any further, payments of statutory neonatal care pay to an employee or a former employee to give that person the details of the decision and the reasons for it. Regulations 12 and 13 provide for officers of Revenue and Customs to determine issues relating to a person’s entitlement to statutory neonatal care pay. Regulation 14 provides for employers, employment agencies, persons claiming statutory neonatal care pay and others to furnish information or documents to an officer of Revenue and Customs on request. A separate impact assessment has not been prepared for these Regulations. The Regulations are part of a package of legislative measures and the relevant impact assessment is the Neonatal Care (Leave and Pay) Act 2023 impact assessment which was published on 23 January 2023. A copy of that impact assessment can be obtained from the Department for Business and Trade, Old Admiralty Building, London, SW1A 2PA.
This explanatory note summarizes the regulations' key provisions.
It outlines employer reimbursement, the process for obtaining reimbursement (deductions and direct payments), overpayment recovery, record-keeping requirements, HMRC's inspection powers, information disclosure, dispute resolution and information requests.
It also notes that a separate impact assessment was not created for this specific document, but that there is a larger associated document created in 2023.