Self-employed Maternity Allowance
Self-employed Maternity Allowance – how £36.40 can net you over £5,000
It’s fairly well known that if you are pregnant and have been working for your employer for at least six months, then you’re entitled to receive Statutory Maternity Allowance from them for at least six months.
But what happens if you’re self-employed? Surely you’re on your own?
Not many people are aware, but if you have worked for yourself for at least six months you can claim a maternity allowance from the Department of Work and Pensions (DWP).
“Great,” you might be thinking. “How much is it, and how can I get my hands on it?”
It’s certainly worth having. You can get paid either 90% of your average weekly earnings or £139.58 per week – whichever is the lower. Better still, as long as you are at least 26 weeks pregnant, this allowance gets paid to you for a full 39 weeks.
Getting your hands on the money, though, is far from straightforward. You’ve got to prove to the DWP that you’ve earned an average of at least £30 weekly for a minimum of 13 weeks in the 66-week period before your baby is due.
That’s usually easy enough.
The sticking point, though, is proving that you also paid Class 2 National Insurance Contributions for at least 13 weeks.
The problem here is that, from 2015/16, class 2 NICs became payablein a lump with your tax bill at the end of a tax year – rather than by a monthly direct debit in arrears, as before.
Even more annoyingly, if you don’t make profits of at least £5,965 over a year, you don’t pay any Class 2 NIC contributions.
The result? Lots of self-employed women on low incomes have found themselves chiselled out of their maternity allowance.
Even if you make enough profit to pay Class 2 NICs, your problems aren’t over. Say you’re pregnant at the moment. Your baby’s due in the New Year, but you won’t be due to pay your Class 2 NICs until 31 January 2017. So how on earth can you qualify for the maternity allowance?
You’d think that you’d simply have to pay the NICs voluntarily. But, no – DWP won’t let you do that unless you belong to a very small category of people, such as ministers of religion or those who run a property business.
So what do you do about it?
In theory, you have to make a claim to the DWP on form MA1. The DWP then contacts HMRC to confirm whether you have paid sufficient Class 2 NICs. HMRC should then get in touch with you and offer you the opportunity to pay any missing NIC contributions in advance.
In reality, women frequently get caught up in the middle of a bureaucratic nightmare as the DWP and HMRC struggle to apply a rule that has been made so complicated it is almost unworkable
Which is a shame, because 13 payments of £2.80 (£36.40) should net you up to a tidy £5443.62 of maternity allowance.
So if you’re pregnant and self-employed, be sure not to miss out on this money. If you have any problems claiming it, be sure to get in touch and we’ll do all we can to help you.