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Becoming a parent changes everything. As a business owner, you may also be juggling your finances and thinking about your family’s future. This guide is here to help you, step by step. You deserve information that makes sense for your life, no jargon, no confusion.
Most employees get Statutory Maternity Pay (SMP) so what happens when you are the boss?
This guide will help you understand:
Quick links:
Key terms explained:
Maternity Allowance (MA) is an alternative benefit for those who do not qualify for Statutory Maternity Pay (SMP). You can get up to the same entitlement as you would on SMP and can even still use KIT days before you end your leave!
Your eligibility and the amount you can get is based on your employment record during your Test Period (the 66 weeks before you baby is due). Next we will look at the differences in criteria depending on your circumstances. Feel free to skip to the part that best fits you!
Important:
It is only available to the person who is pregnant or has given birth. Unfortunately there are currently no equivalent supports for adoption, surrogacy, or for non-birthing parents in self-employment (yet).
Whilst writing this blog it was announced that there will be a Government review into statutory leave and pay. At Watmore & Co. we hope these changes will help reflect the diversity of modern families, ensuring that everyone is able to spend time at home during this precious time. Here is a link to the BBC article if you would like to read more: Parental leave and pay to be reviewed.
Need to skip to your situation?
You can claim if:
Tip:
If you have not paid enough Class 2 NIC, you can still get a lower rate. You can also top up your voluntary NICs to get the full rate. HMRC will write to you after your application with instructions on how to do this.
Want to check payments?
As a director, you only get Maternity Allowance (MA) if you do not qualify for Statutory Maternity Pay (SMP) via your business. This is because DWP consider directors to be employees of their own company for things like statutory pay and leave. If you have more than one business you may be able to claim SMP from all of them.
First provide your business with:
Don't skip this step, as the records may be needed when the business reclaims some of the statutory pay! It's also important when are not the only director or owner of the business, as you need to formally let them know (even when they are your partner).
Next use HMRC's maternity pay calculator to check your eligibility. You will need to:
All these dates can be a little tricky but the calculator above will work this part out for you! It also gives you a breakdown of your SMP payments at the end. Your company can usually recover between 92% and 108.5% payments including:
Find out more about that process and how to get an advance with: GOV.UK Recover Statutory Pay
For directors, average earnings are worked out differently to employees. Your salary and any dividends may both be taken into account. The method to calculate this depends on how your company is set up and how you are paid. Read more with: GOV.UK Directors and SMP guide before you complete the calculator.
If you do not get SMP, you should:
Need more support?
Our outsourced payroll specialists work seamlessly with our team. Allowing us to offer you their expertise in our accessible format, helping to make things like this simple. Contact us for one-to-one guidance.
You may be eligible if:
Key differences:
Basic eligibility (for both people in the Test Period):
Check our quick table below to see how much you could get depending on your situation.
|
Work Type |
Rate (per week) |
|---|---|
|
Self-Employed (with no Class 2 NICs) |
£27 |
|
Self-Employed (with some Class 2 NICs) |
Pro-rata rate between £27 - £187.18 |
|
Self-Employed (with 13 weeks or more Class 2 NICs) |
£187.18 |
|
Director (not eligible for SMP) |
£187.18 |
|
Unpaid partner in spouse’s business |
£27 |
Backdating:
If you apply after the baby is born, your payments start from the birth date. You may get a back payment.
Claiming MA can:
The benefits which can be affected are:
Need help?
If your family receives Universal Credit and this is your 1st or 2nd baby, update your portal as soon as you can. This will help you get the addition child element added to your claim.
Modern families do not always have a "birthing parent", so what other support is there? A family can be formed in a variety of beautiful ways, including adoption and surrogacy. This section covers what support is available if you or your partner are not the birthing parent.
When using a surrogate you and your partner may be eligible for adoption or paternity pay and leave. Neither of you will be able to get maternity pay and leave.
If you and/or your partner are Self-Employed or are Unpaid Workers in each others business.
If you or your partner are a Director
Read more about this in our MA and Directors section
If you or your partner are employed (full-time or part-time)
There is special rules for Shared Parental Pay when your partner is getting Maternity Allowance. Read on to find our more or Skip to the end.
Think of Shared Parental Leave (SPL) and Shared Parental Pay (ShPP) as add ons to your Statutory options. You cannot be eligible for them unless you are also eligible for one of these:
You may have noticed that Maternity Allowance (MA) is missing from this list! Shared Parental Pay and Leave is not available to you if you are:
Meaning a parent who qualifies for MA will not get ShPP, but their partner might! For your partner to be eligible they must:
You will need to:
Shared Parental Leave and Pay, has the benefit of being taken in chunks rather than all in one go. This means that the parent can return to work for short periods and receive full pay, before going back on leave. You will need to decide if this would be the best solution for you as a family, and for your businesses.
Key steps:
Support and information:
Planning your leave while running a business isn’t always simple. But you’ve taken the first step by learning what Maternity Allowance can offer. Whether you’re self-employed, a director, or supporting a partner’s business, you deserve support that works for you, your family, and your business.
If you need help putting your plan into action, or any part of this process feels confusing, you are not alone. We are here to help. That might mean building a cashflow forecast that let's you plan with confidence, or helping you navigate statutory pay. Our team can guide you through the next steps and help with the admin, so you can focus on what matters most: time with your growing family.
Book a call or contact us to get started.
Alternatively you can check out HMRC's official Parental and birth benefits guides.