How to get the most out of your maternity leave
Whether you are a director of a limited company, a sole trader or in a partnership you are still entitled to maternity leave and some form of financial support when you have a baby.
Here is the lowdown on what support is available to you...
Limited company directors
As a sole director of a limited company you are technically an employee of a company so the same rules apply for you as for mums who are employed.
You are entitled to Statutory Maternity Pay (SMP):
- SMP is paid for up to 39 weeks.
- You get 90% of your average weekly earnings (before tax) for the first 6 weeks, and then £156.66 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks.
- SMP is paid in the same way as your wages — e.g. monthly or weekly.
- You can use the SMP calculator to work out how much you could receive.
SMP usually starts when you take your maternity leave. But it will start automatically if you’re off work for a pregnancy-related illness in the 4 weeks before your baby is due (Sunday to Saturday).
You can apply for Statutory Maternity Pay (SMP) in advance! So you could receive the lump sum for the full 9 months before your baby arrives if you time it right.
You will need to calculate the SMP per tax year so if your planned maternity leave spans two tax years (runs over 5th April in any year) you will need to provide separate calculations for the amount and number of weeks in each tax year — ask your accountant to help you with this.
You can reclaim 103% if your business qualifies for Small Employers’ Relief (this will likely apply to most of us in F&F). You can apply up to 4 weeks before you want the first payment.
For more information on SMP as a sole director of a limited company, visit here.
If you’re a sole trader or in a partnership
If you're a sole trader or in a partnership you can claim Maternity Allowance.
Download the application form and guidance notes here.
Apply as early as possible because it can take the Department for Work and Pensions (DWP) ages to respond.
In order to receive the full amount (£156.66 per week) you must have paid Class 2 National Insurance for at least 13 of the 66 weeks before your baby is due.
If you have not paid enough Class 2 National Insurance, you’ll only receive £27 a week for 39 weeks.
The DWP will check if you’ve paid enough when you make your claim and they’ll write to you if you haven’t. This is likely to happen to most of us here because we self-employed folk currently pay our National Insurance six months after the tax year ends, so please don’t be alarmed if you are told you’re only entitled to £27 a week initially!
You will usually be able to get the full rate by making early National Insurance payments. HM Revenue and Customs (HMRC) will send you a letter to tell you how to do this. You’ll need to pay using the reference number in the letter to get the full rate, even if you’ve recently made a payment through Self-Assessment.
If the system is slow and your payments are delayed, or you're not initially given the higher rate, rest assured that you will receive any payments you are owed eventually. Any overdue money should be sent to you in a lump sum once your application has been amended / approved.
Keeping In Touch (KIT) days
When on maternity leave (as an employee or self-employed) you are entitled to 10 Keeping In Touch (KIT) days. This means you can work 10 days without losing any of your maternity pay.
The rules for this are that it has to be days, rather than hours. So strictly speaking, even if you only sent one email in a day that would count as one of your KIT days so try to group work tasks together if you can.
How you use your KIT days across your leave is up to you. For example, if you plan to take 9 months maternity leave:
- You could work 2 days per month during months 5-9.
- You could work 1 day in month 6, and then 3 days per month during months 7-9.
- You could work 5 days per month during months 8 and 9.
- Or any other combination.
FYI, if it helps to reduce any stress around KIT days — I have never known the DWP to check on new mums to find out if they are working and demand that they pay back their SMP.
My view is that these rules on not working when you are on maternity leave are for the benefit of the mum, baby and family as a whole, rather than a way of stopping self-employed people from earning money.
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