Maternity allowance guide for the self-employed and expecting

What is Statutory Maternity Pay?

Statutory Maternity Pay (SMP) is the regular payment employers make to their employees when they have a baby and are on maternity leave.

The amount you can expect to receive is calculated at 90% of your average weekly earnings (before tax) for the first six weeks, then £172.48 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks.

This will be paid in the same way as your usual wages, whether you are usually paid weekly or monthly, and tax and National Insurance will be deducted as usual.

You can work out how much you could get by using the government’s maternity pay calculator. Payments will start automatically as soon as you take your maternity leave, including if you take time off for a pregnancy-related illness up to four weeks before your baby is due.

Are you eligible for Statutory Maternity Pay if you’re self-employed?

Unfortunately, self-employed people are not entitled to SMP. You are only entitled to SMP if you are in full-time employment with an employer that pays you through PAYE and deducts National Insurance and tax for you.

Even if you have been working for an employer full-time and are paid through PAYE, there are time restrictions on when you are entitled to SMP. In order to receive SMP you must have been working for the company for at least 26 weeks in the 15th week before your baby is due.

The good news is if you’re self-employed, or are employed but unable to get SMP, you could be entitled to Maternity Allowance.

Maternity Allowance – an alternative to Maternity Pay

Maternity Allowance is a payment similar to SMP but specifically for people who don’t meet the SMP requirements, including those in self-employed work.

It enables pregnant people to receive maternity leave pay during the time they take off to have a baby even if they are not entitled to receive SMP. This includes those who are employed but unable to receive SMP, the self-employed, those who have recently stopped working, and those who do unpaid work for their spouse or civil partner’s business.

Are you eligible for Maternity Allowance if you’re self-employed?

Yes, you most likely are. Maternity Allowance is effectively maternity pay for the self-employed.

To be eligible as a self-employed individual, make sure you’re registered as self-employed with HMRC. In order to receive the correct amount of Maternity Allowance you should register as soon as possible because, though HMRC can accept late registration, it may affect how much you’re entitled to or potentially affect the eligibility of your claim.

If you’re both self-employed and a PAYE employee for another business, and are going to receive SMP from that employer, you cannot also receive Maternity Allowance.

There are two different rates of Maternity Allowance: full and reduced. To qualify for either rate of Maternity Allowance you must meet the following criteria during the 66 weeks before the baby’s due date:

1. You must have been self-employed for a minimum of 26 weeks
2. Your earnings must be £30 a week or more, for at least 13 weeks (the weeks don’t have to be consecutive)

You can check if you’re entitled to Maternity Allowance using HMRC’s useful tool.

How much is Maternity Allowance for the self-employed?

Full rate Maternity Allowance

How much Maternity Allowance you're entitled to depends on how many Class 2 National Insurance contributions you’ve paid while being self-employed. The full amount you could be entitled to is £172.48 per week for up to 39 weeks. Maternity Allowance is paid every 2 or 4 weeks straight into your bank account.

In order to receive full Maternity Allowance you must have:

1. Paid Class 2 National Insurance for a minimum of 13 of the 66 weeks before your baby is due
2. Been registered with HMRC as self-employed for at least 26 weeks in the 66 weeks before your baby is due

You can check how much you’ve been paying by logging into your HMRC account.

Even if you haven’t paid enough to be eligible for the full Maternity Allowance, you can make up missing payments. Once you’ve submitted your claim for Maternity Allowance, the Department of Work and Pensions (DWP) will check with HMRC that you’ve paid enough to be eligible for the full rate. HMRC will then contact you to say if you need to make any payments in order to receive the full allowance.

Reduced Maternity Allowance

If you haven’t paid enough Class 2 National Insurance contributions to receive the full Maternity Allowance, you may still be eligible for the reduced rate. For those who aren’t able to receive the full amount there are two different options:

1. If you are registered as self-employed with HMRC but have paid less than 13 weeks of Class 2 National Insurance, your Maternity Allowance will depend on how many weeks of contributions you’ve made. The reduced rate of Maternity Allowance is between the lowest rate of £27 per week and the full rate of £172.48 per week.
2. If you haven’t paid any Class 2 National Insurance contributions, and are registered as self-employed with HMRC, you’ll be entitled to £27 per week Maternity Allowance.

If you have insufficient Class 2 National Insurance contributions when applying for Maternity Allowance, HMRC may contact you to determine how many additional contributions you need to receive the full allowance. Once these contributions are added, your payments will be adjusted and, if needed, backdated, which may take several weeks.

How to apply for Maternity Allowance if you’re self-employed

To receive Maternity Allowance when you’re self-employed you must apply directly through HMRC using their Maternity Allowance claim form (MA1).

You’ll need to fill in the MA1 form and then post it to the address included on the form once you’ve been pregnant for 26 weeks. It’s important not to sign and date the form too early (before the 14th week before your baby is due) or too late (3 months after your baby is born) as this may delay your claim or you may lose money.

Within the form you’ll need to provide details of your employment for the 66 weeks before your baby is due, which is known as the ‘test period’. HMRC has a ‘test period’ calculator to help you figure out these dates to ensure you include the correct information.

You’ll also need to send proof of your baby’s due date which could be either a letter from your doctor or midwife on headed paper, or your MAT B1 certificate.

If your baby has already been born you’ll need to send a birth certificate; a letter from your doctor or midwife on headed paper; or your MAT B1 certificate, if the section about the actual date of birth has been filled in by a doctor or midwife.

You won’t need to send proof of income if you’re self-employed, unlike other people who are claiming Maternity Allowance, as HMRC will check your National Insurance contribution record for eligibility.

When do you get the Maternity Allowance payments?

Once you’ve applied for Maternity Allowance you should hear from HMRC within 20 working days. If you’re eligible you will be sent a form to confirm how much you’re entitled to and asking you to confirm your final day of employment before taking maternity leave. You can also indicate your preferred start date on your MA1 form (under section 42).

Payments for Maternity Allowance can start up to 11 weeks before your baby is due on any day you stop working, but must not start later than the day after they are born. You can choose whether you’d like to be paid every 2 weeks or every 4 weeks by ticking the relevant box (under section 112) of the MA1 form.

If your baby arrives early you can change your start date by contacting HMRC to let them know. You will then be able to receive your Maternity Allowance automatically from the day after your baby is born.

Is Maternity Allowance taxable for the self-employed?

Maternity Allowance is tax free so you don’t need to include it in your self assessment tax return.

How can you keep track of your self-employed finances?

Keeping track of your finances in the run up to your maternity leave is vital so you know where you stand when it comes to claiming Maternity Allowance.

Xero Go is a business tracking app that can help track your billing schedule during your pregnancy, along with supporting you with invoicing, expenses, and much more, so you can focus on getting ready for your baby’s arrival.