Statutory Maternity Pay and Maternity Allowance

“What maternity pay am I entitled to?” For women who are starting a family or adding to their family, maternity pay is an important aspect that needs to be considered – even more so when you are self-employed, or have an employer and are self-employed at the same time. Understandably, all women who are planning on having children will want to understand their rights to what maternity pay is available to them. We explain the different options that are available between statutory maternity pay and maternity allowance.

Am I entitled to Statutory Maternity Pay?

To be eligible for statutory maternity pay you will need to meet all the following conditions:

• Receive an average salary of at least £123 per week
• Are in employment in the 15^th week before your baby is due and have been employed by your employer for at least 26 weeks prior to this ‘qualifying week’
• You provide the correct notice to your employer regarding your pregnancy and your request for statutory maternity pay
• You give proof of your pregnancy (a letter from your doctor or midwife and MATB1 certificate which is given to you by a doctor or midwife no more than 20 weeks before your due date)

How much do I receive with Statutory Maternity Pay?

Statutory Maternity Pay is available for up to 39 weeks. For the tax year 2023/24 you will receive:

• 90% of your average weekly earnings (before tax) for the first 6 weeks
• £172.48 or 90% of your average weekly earnings before tax (whichever is the lower) for the next 33 weeks

You will receive your Statutory Maternity Pay in the same way as your normal wages (either weekly or monthly etc) and tax and National Insurance will be deducted from this.

If for any reason your employer is unable to provide statutory maternity pay, they must give you form SMP1, explaining the reasons why, within 7 days of making their decision. If you cannot receive statutory maternity pay, you may be able to receive maternity allowance instead.

When can I receive Maternity Allowance?

Maternity Allowance is offered by the government rather than your employer. You can receive Maternity Allowance for up to 39 weeks. In order to qualify you will need to meet all the following conditions:

• You need to be employed or self-employed for at least 26 weeks in the 66 weeks before your due date
• You need to have earned a minimum of £30 for at least 13 of those weeks
• You will need to have paid enough national insurance contributions in order to receive the full sum of maternity allowance payments (but this can be topped up in order to ensure you receive the full amount)
• You may receive reduced rates of Maternity Allowance where you have not been employed or self-employed but have been helping a spouse or civil partner with their business without receiving pay

How much do I receive with Maternity Allowance?

For the tax year 2023/24 you will receive similar amounts to statutory maternity pay – either £156.66 per week or 90% of your average weekly earnings (before tax), whichever is less.

If you are only entitled to receive reduced rate Maternity Allowance, this will be £27 per week for 14 weeks.

How do I apply for Maternity Allowance?

You can claim Maternity Allowance as soon as you are 26 weeks pregnant and payment can start 11 weeks before your baby is due. Bear in mind, it can take up to 24 days to receive a reply on your application so make sure you allow plenty of time to organise your maternity allowance. Full details on how you can apply can be found here.

Maternity Payments for Employers

If you are an employer and have an employee seeking statutory maternity pay you can reclaim 92% of this cost from HMRC through your payroll software. For SMEs, you may be able to reclaim 103% of this cost if your business qualifies for Small Employer’s Relief. To qualify you will need to have paid £45,000 or less in Class 1 National Insurance in the last complete tax year before the ‘qualifying week’ (15^th week before the due date).

You also need to be mindful that whilst your employee is on maternity leave, they are still entitled to all their existing employee rights and this will include annual leave accruals, company-wide pay increases and contributions to their workplace pension if this applies.

Maternity Pay if you are a director of your own limited company

Where you are a shareholder and director of your own limited company it is possible to pay yourself statutory maternity pay and claim this back from HMRC but only under certain conditions. Firstly, your limited company must have an employee who is able to carry out the work you would normally complete. Secondly, the company must be able to earn enough income during your maternity leave to pay for your statutory maternity pay. If you fall under this scenario then you will still have to meet all the conditions required in order to be eligible to receive statutory maternity pay. If not, then you will have to meet the conditions required for maternity allowance in order to claim maternity payment from the government.

For any further advice on payroll issues please see our Payroll services page or get in touch. Don’t miss out on our other tax advice tips for when you’re starting a family.