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Director limited company maternity allowance

(2 Posts)
KezFarrell Sun 30-Mar-14 13:41:19

Hi all

Grateful of some advice. I do have an accountant but they have been very general about this saying it should be fine but I want to find out what the facts are.

I have a limited company and was advised to convert to this from being a sole trader. I'm a consultant and only earn what I bring in from direct work with clients.

My partner and I want to try for a second baby. I have been funding us for a few years as he has done a phd and has been unable to get work in the last year.

I want to check whether I would qualify for maternity allowance being the director of the company or whether I need to become an employee of my company and pay myself a salary. The thing is we live by my monthly rankings and have no savings so I can't afford not to use my full earnings each month.

We are both desperate to expand our family and love our little girl. I know it is a sensible thing to wait until my partner finds work but I have been waiting for a while already and just want to make this work for myself. I can make sure we can survive for 6 months on maternity allowance as will take extra work on the lead up to going off to put a bit aside to pay for bills (this is what I did last time). I just want to check that I would definitely qualify and whether it is best to just stay the director or to become an employee?

Thanks in advance for your help

Kerry

K8Middleton Sun 30-Mar-14 13:57:31

As the director of a limited company you are already an employee. If you meet the income thresholds in the relevant qualifying weeks then you will be able to claim smp. Your company can then claim back 103% from HMRC if your total Class 1 NICs for the previous tax year (both employee and employer) are £45,000 or lower. NB smp is taxable.

If for some reason you don't qualify for smp (eg you changed to a limited company while already pregnant) you may qualify for maternity allowance. This is claimed via Job Centre Plus and is a non taxable benefit. Details about eligibility here: https://www.gov.uk/maternity-allowance/eligibility

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