You’ve just found out that your first employee is pregnant. Exciting! As part of your legal requirements as an employer, you know you’ll have to provide Statutory Maternity Pay, or SMP, to your employee for up to 39 weeks of maternity leave. This rule regarding government maternity allowance means:
- Paying 90% of their salary for the first six weeks of their leave
- Paying a weekly allowance of £156.66 for up to 33 weeks
And while you’re happy to help support a team member as they start or grow their family, you can’t help but feel stressed about the financial burden this puts on your shoulders.
Don’t panic. Covering SMP doesn’t have to be a cash flow nightmare for your creative business. There are two primary options for lifting some of the financial load:
Reclaim some or all of your statutory maternity payments
Through government maternity allowance, every employer in the UK is entitled to be refunded at least 92% of an employee’s SMP. Employer’s who qualify for Small Employer’s Relief can get refunded 103% so long as they’ve paid less than £45,000 in National Insurance over the last tax year.
Usually, HMRC refunds you through reductions in your monthly PAYE and NI tax liabilities. However, there are some cases in which you may not be able to offset statutory maternity payments against your tax liabilities, and you’ll have to request a repayment from the PAYE Employer Office.
Unfortunately, requests for repayments can only be made at the start of the next tax year. If waiting that long simply isn’t an option, we recommend planning ahead and applying for advance payment.
Apply for advance payment of your employee’s SMP from HMRC
If you don’t have the available cash flow to cover your employee’s SMP, you can apply for Advanced Funding for Employers from HMRC.
You can apply for this funding up to four weeks before you’re due to make your first payment to an employee on maternity leave. It’s important not to apply any earlier than this, as HMRC may return your application without an answer.
You’ll also need to provide a copy of your employee’s Maternity Certificate, or form MAT B1, to confirm both the pregnancy and the expected due date.
At the current rate of £156.66 for 39 weeks of maternity leave, you could receive advanced funding of up to £6,109.74. You can apply for this funding yourself through the Government Gateway, but be careful: you could be charged a penalty of up to £3,000 if you provide any incorrect information in your application.
If you’d like some assistance in applying for funding, or understanding how this could affect your business overall, we’re here to help. Our mission at Raedan is to protect your creativity by removing small stressors and financial obstacles so you can focus on your grand creative vision. To start, fill out this form to tell us more about yourself.
