If you’re reading this because you’re already pregnant – Congratulations! If you’re in the planning phases of starting a family, well done for being so forward thinking when it comes to money management. Today I want to talk about how much you will get paid whilst on maternity leave in the UK.
Starting a family is such an exciting time but it brings with it enormous change and one of the biggest changes, especially for women or those giving birth, is to your finances. Chances are that straight away you thought about money in terms of the things you might need to buy for a baby but at what point did you start to question how much you would get paid whilst on maternity leave? It can be quite worrying when the realisation starts to set in that your normal wage wont necessarily be coming in whilst you’re off work with a new baby but your bills aren’t going anywhere. Worse still it can be difficult to understand the jargon and even if you DO know what you will get paid, do you know what comes out of that? You might be asking how much will you ACTUALLY take home on maternity pay and why do some people get more or less?
If you’re in the planning phase of starting a family, the current financial climate and the soaring cost of living might be putting you off. You might even be wondering if you can actually afford to have a baby at all. As they say, information is power so let’s get onto the real reason you’re here and discuss how much you can expect to be paid when you’re off on maternity leave in the UK in 2023.
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DO I HAVE TO TAKE MATERNITY LEAVE AND WHEN DOES IT START?
There is a compulsory 2 week period you MUST take off after having a baby (this goes up to 4 weeks if you work in a factory). After that you can technically return to work if you wish.
The longest you are ordinarily entitled to is 12 months which is split into two parts.
Weeks 1 – 26 are known as Ordinary Maternity Leave and weeks 27 – 52 are Additional Maternity Leave.
Your maternity leave starts on whatever date you request via your employer but is usually no more than 11 weeks before the birth of the baby. If your baby is born early then your maternity leave starts on the day of birth.
It is also worth noting that if you are off sick with pregnancy related illness in the 4 weeks before your due date, your maternity leave will automatically start.
WHO IS ELIGIBLE FOR STATUTORY MATERNITY PAY AND HOW DO I GET IT?
To be eligible for statutory maternity pay you need to be employed and earning and average of at least £123 a week.
You must have been working for your employer for 26 continuous weeks continuing into the 15th week before your estimated due date. This is really important to consider if you’re planning to switch jobs around the same time as you’re planning a family or during early pregnancy. Move at the wrong time and you’ll be ineligible.
This 15 week point is also significant because it is the deadline by which you MUST give your employer notice that you are pregnant, when the baby is due and when you’d like to commence your maternity leave (28 day notice period required for maternity leave to start). You might have to provide this in writing so be sure to check your company maternity policy.
You’ll also need to follow this up by providing proof of your pregnancy either by doctor/midwife letter or, more commonly, a MATB1 certificate provided to you by your healthcare professional. Without this, the government website states you will not receive SMP.
HOW MUCH MONEY WILL I TAKE HOME ON STATUTORY MATERNITY PAY?
Many women will be eligible for statutory maternity pay (SMP). This is paid for 39 weeks (around 9 months) in the same way as you would usually receive your wages.
For the first six weeks you will receive 90% of your average weekly earnings. That’s pretty good, right?
However for the next 33 weeks, which is around 7 and a half months, you will only receive £156.66 per week, unless you usually earn less than this, in which case you will be paid 90% of your average weekly earnings. That figure is before tax AND you are still liable to pay national insurance from it. It’s not possible to give an exact take home amount because this varies depending on multiple factors but many can expect to take home somewhere between £550 – £600 a month. In some cases that could be a HUGE drop in monthly income.
You might have noticed I said that Statutory Maternity Pay lasts for 9 months BUT I also said you could have up to 12 months maternity leave. It doesn’t add up, does it? That’s because the last 3 months of your maternity leave on Statutory pay is actually unpaid meaning, if you choose to take it, you receive… nothing.
Your HR or payroll department will often supply you with a breakdown of your projected earnings during the time you’re on maternity pay. This will also make it clear when your SMP is due to end and the optional unpaid part of a full 12 month maternity leave begins.
WHAT IS OCCUPATIONAL MATERNITY PAY?
Have you ever been confused as to why someone else is getting a different maternity package to you? Occupational maternity pay could be the reason. This is when an employer offers an enhanced maternity package to employees meaning they receive additional benefits. Some employers in the UK offer up to SIX MONTHS on full pay before dropping to SMP. For this reason it is well worth making sure you consider the organisational maternity policy when applying for a job if you are thinking of having a family in the future. You will also need to make sure that you will qualify for any enhanced package as there are requirements to have been employed in the company for a set amount of time before you can claim this benefit.
Enhanced packages are not just for those giving birth either as some companies offer enhanced paternity packages where the partner can also get additional benefits to the paternity leave provided by the government. In fact, Aviva for example actually offer an equal parental leave policy whereby ALL new qualifying parents are entitled to 12 months off with six months at full basic pay which is frankly mind blowing when compared to the one week paid at statutory rate and one unpaid week offered as standard to new fathers and non-birthing partners by the government. Needless to say, where you work could have an enormous impact on your finances as a new parent.
WHAT IF I DON’T QUALIFY FOR STATUTORY MATERNITY PAY?
Don’t panic just yet, there are other options you MAY be eligible for if you don’t qualify for statutory maternity pay with the main one being maternity allowance. This is most often relevant for those who have been registered self-employed for the last 26 weeks. It can also apply to people who have recently stopped working, are employees but are not eligible for SMP or who do unpaid work in their spouse or civil partners business under certain conditions.
Maternity allowance is slightly more complicated because there are differing levels. If you qualify because you recently left employment you will be paid £156.66 per week (or 90% of your average weekly earnings if less) for 39 weeks after which you can choose the have 13 weeks unpaid. This is basically the same as maternity pay but without the initial 6 weeks at 90% earnings.
However for the self employed it can range between £27 up to the full £156.66 depending on your class 2 national insurance contributions in the lead up to the birth and if you haven’t paid any, you will get the minimum. It is possible to pay additional class 2 NICs if you’re planning a family as a self employed person.
IN SUMMARY
Whilst I can’t tell you EXACTLY what you will take home when you’re on maternity leave, I hope you now have a better understanding of the various schemes and options and what they provide. You will also now have a ballpark figure you can use to estimate your likely take home pay whilst on statutory maternity pay.
If you’re a way off starting your family but you know it’s something you do want in future then I would seriously start to look into your company maternity policy and benefits alongside that of your partners. Making a change in your employment could completely change your experience of being new parents but just remember, you need to bear those qualifying periods in mind before making any moves.
If you’re pregnant now or planning to become pregnant in the very near future then I’d encourage you to read my post about how to calculate how much money you need to save up to survive maternity leave. This kind of pre-planning is the best way to ensure you can have a less stressful start to being a new parent and concentrate on your new family instead of your finances.
Happy Budgeting
Leigh