Your guide to Statutory Maternity Pay for the self-employed

Navigating maternity leave can be complex and stressful, especially when you are your own boss. So what payments are you entitled to during maternity leave as a self-employed person? This article will look at the following areas:

• What is Statutory Maternity Pay?
• Are the self-employed eligible for Statutory Maternity Pay?
• What is the alternative for maternity pay?
• How do I apply for Maternity Allowance?
• Can I freelance while on maternity leave?

Statutory means ‘required by law’ and so Statutory Maternity Pay is the payment employers must provide to eligible employees for maternity leave. It is an employee’s right to be paid during and to have a job awaiting them on their return from maternity leave.

Statutory pay is paid for up to 39 weeks. You’ll receive 90% of your average weekly income (before tax) in the first 6 weeks. After which you’ll get £151.97, or 90% of your average weekly income, whichever equals less, for the remaining 33 weeks.

The answer to this depends on how your business is set up. If you are the director of your own limited company and pay yourself a salary, then you will be able to pay your own Statutory Maternity Pay through the business. This is because you are a paid employee of the company. 

If you are not set up as a limited company and operate as a sole trader, partnership or freelancer then the simple answer is no. Since Statutory Maternity Pay is a benefit paid to employees, to be eligible you must be in full-time employment that pays you through PAYE and manages your National Insurance contributions. As a self-employed person, you are not paid in this way and so you wouldn’t qualify to receive it.

The alternative for self-employed people is to claim Maternity Allowance. This is a benefit for those who don’t meet the requirements of Statutory Maternity Pay, and self-employed people would fall into this bracket. You can choose to receive your payments every month or every two weeks, and you can start claiming for Maternity Allowance once you are over 26 weeks. 

For Maternity Allowance, the amount you’ll receive will be based on your eligibility. Payments can start up to 11 weeks before your due date and you can get one of the following options:

• £151.97 per week, or 90% of your average weekly income, whichever is less. This benefit will be paid for 39 weeks maximum.
• £27 a week for 39 weeks.
• £27 per week for 14 weeks.

As with any benefit claimed from the Department of Work and Pensions (DWP), you have to fit certain eligibility criteria, and there is a wide range for Maternity Allowance. You can check your eligibility on the HMRC calculator.

If you find that you are not eligible for Maternity Allowance, you may still be eligible for Employment Support Allowance (ESA). If you have applied for Maternity Allowance and are turned down, the DWP will automatically consider you for ESA instead. The rates are slightly different from Maternity Allowance and will depend on factors such as employment status and age.

Maternity Allowance is very simple to claim. You print and fill in the MA1 form, which you can find on the HMRC website, and send it via post with evidence of your baby’s due date attached. A letter confirming this information will be easily provided by your GP or obstetrician. 

Part of the eligibility criteria is that you have paid sufficient National Insurance contributions in your time as a self-employed person. If you are registered as self-employed with HMRC, they will be able to check your National Insurance record. This will allow them to verify that you have over the weekly earnings and you will not have to prove your income. If you have not paid National Insurance contributions, there may be ways to make voluntary contributions or you can send proof of income to HMRC if requested.

Bear in mind that you are not legally allowed to do any work in the two weeks following the birth, which is known as compulsory maternity leave.

If you are self-employed as well as working an employed position, and are receiving Statutory Maternity Pay, then you may be able to continue freelancing while on maternity leave. You must first check that your employment contract does not prohibit you from doing work in your maternity leave period. If it doesn’t state that you can’t, then go ahead and seek some freelance work to support your income. Your Statutory Maternity Pay will not be affected by any freelance work you undertake.

If you are claiming Maternity Allowance as a self-employed person, then you are only allowed to work up to ten days during your period of payment from the DWP. These ten days are known as ‘Keeping in Touch’ days (KIT). Even if you carry out just an hour’s work, it will count as a full day. So be careful of accepting freelance work during this payment period if it means that you will become ineligible for the benefit. 

Financial worries can be a big part of any self-employed person’s working life. A simple app like Countingup can make it easier for you to manage your money.

Countingup provides a business current account and free built-in accounting software in one app, with instant invoicing and automated bookkeeping features. It is saving UK business owners hours of time-consuming work and helping thousands keep on top of their finances. 

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