2019-20 tax for small business owners and contractors
Sole trader or director of your own limited company?
Pregnant or planning to start a family?
Confused about Maternity Pay & Allowance?
Pregnant or planning to start a family?
Confused about Maternity Pay & Allowance?
There are 2 distinct benefits you could be entitled to claim depending on your business structure and level of earnings: Statutory Maternity Pay or Maternity Allowance.
Sole Trader
If you are self-employed, you are not entitled to Statutory Maternity Pay (SMP) but you may be entitled to Maternity Allowance (MA).
Maternity Allowance is a benefit paid weekly by Jobcentre Plus. MA can be paid for up to 39 weeks and no income tax or NI contributions are payable on Maternity Allowance.
The standard rate of MA is currently £138.18 per week.
If you are self-employed and do not have a small earnings exception certificate, for any week covered by a Class 2 NI contribution you will be treated as having enough earnings to result in the standard rate of MA, payable at the end of the week covered by a Class 2 NI contribution.
If you are self-employed and hold a small earnings exception certificate, you will be treated as having earnings equal to £30 at the end of any week covered by your certificate, and receive a weekly rate of MA of £27.00 (90% of £30).
Director of your own limited company
To qualify for Statutory Maternity Pay, you must satisfy the continuous employment rule (continuous employment for at least 26 weeks into the qualifying week (which is the 15th week before the week in which the baby is due) and the earnings rule.
Earnings rule: your average gross weekly earnings must be at least equal to the lower earnings limit for National Insurance (NI) purposes: £111 a week for tax year 2014/15.
The amount you get depends on your earnings. The first 6 weeks of SMP are earnings related and you will get a weekly rate equal to 90 per cent of your average weekly earnings. The remaining 33 weeks are paid at the weekly standard rate SMP of £138.19 or the earnings related rate if this is less than standard rate SMP.
SMP is paid by the limited company and reclaimed from HMRC.
If you do not qualify for SMP, you may be entitled to MA.
For more information
Contact us to speak about it.
About the author
Ingrid Niang est expert-comptable britannique avec seize ans d’expérience variée en Angleterre. De nationalité française, elle a créé son cabinet FRAccountants en 2009 et travaille tout particulièrement avec des entrepreneurs, chefs d’entreprise et consultants français ou francophones ayant une activité commerciale au Royaume-Uni. Elle leur apporte un suivi et conseil sur mesure leur assurant de se conformer aux exigences comptables et fiscales britanniques.
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