How does maternity pay work? Part 2: Maternity Allowance

26 June 2017

Maternity pay can be a complex payroll issue to get your head around. Most of us know about Statutory Maternity Pay (SMP), but are you also aware that there’s a Maternity Allowance for mothers who can’t claim SMP?

As we outlined in our last blog, there are some very clear rules around who in your team is eligible for maternity leave and Statutory Maternity Pay – and who’s not.

So if one of your team doesn’t qualify for Statutory Maternity Pay, what can they do? The answer is to claim the lesser-known Maternity Allowance, and to get paid this directly from the state, rather than through your own payroll system.

Maternity Allowance as an alternative to SMP

Maternity Allowance (MA) is an alternative that your employee can claim if they don’t meet the conditions for Statutory Maternity Pay (SMP). It’s not paid by you, as the employer. Instead, the government pay your employee directly every two or four weeks.

The amount your employee will receive varies depending on their eligibility. They’ll get either:

  • £140.98 a week or 90% of your average weekly earnings (whichever is less) for 39 weeks
  • £27 a week for 39 weeks
  • £27 a week for 14 weeks

How does your employee qualify for MA?

So, what are the conditions that apply for claiming MA? Your team member will be eligible for MA for up to 14 week or 39 weeks, depending on their situation:

1. Your employee can claim MA for up to 39 weeks if one of the following applies:

  • They’re employed, but can’t claim SMP.
  • They’re self-employed and pay Class 2 National Insurance (including Voluntary National Insurance) for at least 13 of the 66 weeks before their baby’s due (the amount of Maternity Allowance you get depends on how much Class 2 National Insurance you’ve paid).
  • They’ve recently stopped working.

2. In the 66 weeks before their baby’s due, they must also have been:

  • Employed or self-employed for at least 26 weeks.
  • Earning (or classed as earning) £30 a week or more in at least 13 weeks (the weeks don’t have to be together).
  • They may still qualify if they’ve recently stopped working. It doesn’t matter if they’ve had different jobs or periods of unemployment.

3. If none of the above apply, they might still get be able to claim MA.

They’ll get MA for 14 weeks if for at least 26 weeks in the 66 weeks before their baby is due:

  • They’re married or in a civil partnership.
  • They’re not employed or self-employed.
  • They involved in the business of their self-employed spouse or civil partner.
  • The work they do is for the business and unpaid.
  • Their spouse or civil partner is registered as self-employed with HMRC and pays Class 2 National Insurance.
  • Their spouse or civil partner is working as a self-employed person.
  • They’re not eligible for SMP or the higher amount of MA (for the same pregnancy)

To claim MA, employees need to complete an MA1 claim form.

Get on top of your maternity payments

If you’ve got someone on your team who’s nearing the start of their maternity leave, come and talk to us about whether SMP or MA is the right option – and whether your payroll settings need amending.

Who are FD Works?

At FD Works ours team of accountants and business advisors can help you organise your data, understand your business and provide actionable insight. Our services range from VAT returns to management accounts and financial modelling. Our knowledgeable team are based in Wick, between Bristol and Bath. 

Need some guidance on the maternity rules?

We’ll help get your maternity payments sorted, and your employee receiving the right money each month.

Give us a call