Statutory maternity pay is the minimum amount an employer needs to pay when an employee falls pregnant and takes leave to have their baby. Employers administer SMP through their payroll on behalf of HMRC but can reclaim a portion of what they pay from HMRC when they run payroll. In this guide, I’ll explain more about SMP, who is entitled and the rates as set by HMRC.
This guide is for people who are employed. Different rules apply if you are self-employed and you can find out more in this guide to Maternity Allowance.
Table of contents
1. What is Statutory Maternity Pay (SMP)?
Statutory maternity pay is a legally set amount of time and pay that employees who are pregnant are entitled to take from their employers. This helps eligible individuals to keep their jobs, benefit from a reduced salary (covered as part of their national insurance contributions) and take some time away from work to spend with their new family member.
The rules are set out by HMRC and fall into two sections – statutory maternity pay and statutory maternity leave.
2. Statutory Maternity Pay (SMP) Rates 2021/2022
SMP can be paid for up to 39 weeks at the following rates:
- 90% of their average weekly earnings before tax for the first 6 weeks;
- the lower of £151.97 or 90% of average weekly earnings for the remaining 33 weeks.
Employers are responsible for checking their employees’ eligibility, calculating SMP and paying SMP through the payroll system. This means any SMP paid is subject to income tax and national insurance.
Need help calculating maternity pay? Try the HMRC SMP Calculator >>
3. Statutory Maternity Leave
Employees are entitled to take up to 52 week maternity leave, with the first 26 weeks being referred to as Ordinary Maternity Leave and the remaining 26 weeks being named Additional Maternity Leave. Employers can offer to pay more than the statutory rates, but this is not a requirement.
Statutory maternity leave begins, at earliest, 11 weeks before the expected due date unless the baby arrives early. If the baby is born early the employee must provide a copy of the child’s birth certificate or a document signed by a doctor or midwife to confirm the change of dates for maternity leave.
Employees rights to holiday pay and returning to their job are protected through maternity leave. By law, they must give their employers notice to take maternity leave 15 weeks before the baby’s due date, but they can change this with 28 days notice. Employees can change their return to work date if they give 8 weeks’ notice.
4. Who is Eligible for SMP?
Not everyone is eligible for SMP, to be eligible an employee must:
- be on payroll the 15th week before the expected due date (also known as the qualifying date);
- give their employer the correct notice and proof of pregnancy;
- be continuously employed for at least 26 weeks up to the qualifying date;
- receive a gross salary of £120 a week or more.
Employees who are not eligible for SMP may be able to claim maternity allowance, which is an alternative income top-up from HMRC normally claimed by self-employed individuals. If an employer refuses to pay SMP, they must notify their employee of this and complete an SMP1 form.
4.1 Correct Notice for SMP
The correct notice for SMP purposes is 28 days from the date they want to start their SMP. Employers can ask for this notice to be put in writing but this is not a statutory requirement.
4.2 Proof of Pregnancy
As part of record-keeping for payroll, Employers must obtain proof of pregnancy and keep this on file for 3 years from the end of the tax year the payments are made. Proof normally takes the form of a:
- doctors letter or;
- maternity certificate called a MATB1 certificate.
This documentation is normally issued 20 weeks before the baby’s due date and the employee must provide it to their employer within 21 days of the SMP start date.
5. Reclaiming SMP for Employers (Small Employers’ Relief)
Employers are responsible for administering SMP but they can reclaim a portion of what they pay from HMRC. Normally the amount an employer can reclaim is 93% of the SMP they have paid. However, some small business may find themselves eligible to claim 103% under a scheme known as Small Employers’ Relief.
SMP reclaim can be made each time an EPS is submitted to HMRC as part of RTI, meaning the next payment due to HMRC will be reduced.
Alternatively, if an employer cannot afford to make the payment before making the reclaim from HMRC, they can apply for an advance payment from HMRC for SMP up to 4 weeks before the first SMP payment. Employers can apply online for this scheme.
5.1 Small Employers’ Relief
Businesses can claim small employers relief if they paid £45,000 or less in Class 1 National Insurance contributions in the last tax year, excluding the employment allowance.