Last Updated: Mar 16, 2021

Maternity Pay and Benefits for Company Directors

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All women in the UK are free to have a total of 52 weeks maternity leave from work: 26 weeks extra Maternity Leave and 26 weeks normal Maternity Leave. There are two (2) kinds of maternity settlement (benefits) accessible – Maternity Allowance, remunerated from the Department of Work and Pensions, and the Statutory Maternity Pay (SMP), which is paid by an employer. Only one kind of maternity bonus can be claimed at a time, and should you be the director of a private limited company, you may be entitled to MA or SMP – however the benefit type you select will be based on several factors:

  • Are you the shareholder and sole-director of your own company?
  • Were you employed as a director in a company wherein you have no shares?
  • In your absence, are there any other director(s) that could carry on with the operation of the business?
  • What is the size of your company and how many excess earnings does it make?

Statutory Maternity Pay

Should you be the shareholder and sole director of your Limited company, you may not be able to enjoy Statutory Maternity Pay except if the company possesses other workers that can execute the needed tasks on your behalf, and/or the company can produce enough income in your absence to settle your SMP.

To be eligible for SMP, you need to fulfill 2 basic rules: the nonstop employment rule and the salary rule. In addition, you should provide your employer with proof of your baby’s due date while telling them the date you desire that your SMP starts. To qualify for the nonstop employment rule, you should have been working with your present employer or via a recruitment agency for a continuous minimum period of 26 weeks to the qualifying week. Furthermore, your average weekly gross earnings must at least be equal to the lower earnings limit for National Insurance reasons, which is presently £112 weekly or £5,824 yearly (2015/16). Should you qualify for SMP, you will be eligible to a total of 39 weeks’ earnings.

In the first 6 weeks of your leave, you are to be paid 90% of your average weekly revenue, and for the following 33 weeks, you will be paid a weekly standard rate of about £139.58.

Maternity Allowance

Should you fail to qualify for SMP or you are not able to pay yourself SMP then, you may be eligible for Maternity. provided you:

  • Are employed, yet ineligible for SMP.
  • Are registered as self-employed and paying Class 2 NIC or hold a Small Earnings Exception Certificate.
  • Were self-employed or recently employed.
  • Are not self-employed or employed however are often caught up in the business of your civil partner or self-employed spouse.

You can receive MA for a maximum period of 39 weeks should you have been self-employed or employed for a minimum period of 26 weeks for the duration of a 66-week test period, which runs up to and includes the week before your baby is due. Your total average revenues must be equal to or more than the MA threshold, which is £30 weekly. This is obtained by taking an average of 13 weeks’ salaries for the duration of the test period. The amount of weekly MA you can get will be 90% of your gross average weekly salaries up to a maximum £138.58 weekly, or £27 weekly for about 14 weeks, based on your eligibility.

Maternity benefits for company directors are a tricky subject area that relies on several variables;  we strongly suggest you consult a tax advisor or an accountant for thorough assistance and guidance.