One of the reasons many people start their own business is for the freedom and flexibility that comes with being your own boss. But what happens when you are looking to start a family? Are you entitled to Maternity pay?

If you are employed in a job, maternity pay is straightforward, and your employer will guide you through the process. If you are your own boss, you should still be able to claim some money to help you start or grow your family.

Let’s explore this in more detail.

What is Statutory Maternity Pay?

Statutory Maternity Pay (SMP) is paid to pregnant employees who meet the criteria and this can be claimed for up to 39 weeks.

For the first 6 weeks, you will receive 90% of your average weekly earnings with the remaining 33 weeks being paid at either £184.03 per week or 90% of your average weekly earnings, whichever is lower.

Am I eligible for Statutory Maternity Pay?

To be eligible for SMP, you must have been employed by the same business for at least 26 weeks up to the 15th week before the baby’s due date, and your earnings must be at least £123 per week. You will also need to provide proof of pregnancy via a MATB1 form.

If you do not meet these criteria, you may be able to claim maternity allowance instead.

How do I claim Maternity Allowance?

You can claim maternity allowance once you have been pregnant for 26 weeks. Payments can start 11 weeks before your baby is due.

Maternity allowance is paid by the government rather than your employer and there is an online calculator to help determine how much you could receive.

Apply as early as possible, as it can take several weeks to receive a response to your application.

More details on how to apply can be found here.

What can I claim as a Company Director?

If you are a company director, your company can pay you SMP if you meet certain criteria. These include the eligibility requirements mentioned above, as well as ensuring the company has an employee who can handle your responsibilities during your absence.

If you do not meet the criteria for SMP, you’ll be expected to meet the conditions for maternity allowance to claim payment from the government.

You must still provide the appropriate notice and evidence of your pregnancy, even if you are the only person in your company.

Is there any help with funding from the Government?

As an employer, you can reclaim 103% of the SMP if your business qualifies for Small Employers’ Relief which can assist with your cash flow.

The cost of your company’s statutory payments, including SMP, is typically offset against your PAYE liabilities. If your PAYE liabilities are less than the cost of your statutory payments, you can apply for advance funding from HMRC.

Applying for an advance of funding is useful when your company does not have sufficient cash flow to cover the SMP. You can apply up to 4 weeks before your first maternity payment is due. It is important not to apply earlier, as HMRC may return your application.

If you’d like assistance in applying for funding or would like to know more on how this could impact your business, please feel free to contact us.

Author: Jonathon Greenaway