Maternity Allowance - Company Director and proving income

[Girlspeed]

HI

I have a limited company and am the only employee - the director of the company. Under my accountants advice we would file PAYE annually ( not weekly or monthly) Now i am in a position where i want to close the company as there will be no income once i am unable to work because of my pregnancy.

I want to apply for Maternity Allowance (MA) but am having trouble with the proving my income bit. I have no payslips as the Payroll would only be once a year so how am i meant to proove i worked for 13 weeks of the test period?

Any help on this would be much appreciated as im dreading going to no income and MA would at least pay the rent!

Can't you just pay SMP through the company and then the company claims it back from HMRC? What does your accountant say?

PAYE is always filed annually.

Have you discussed this with your accountant? The rules for SMP for directors are complicated, but usually end up with the company paying you SMP and claiming it back from HMRC.

There are significant opportunities and pitfalls for tax planning around maternity leave, even if income to the company stops.

He doesnt seem to know much or be very helpful with the accountancy advice. I dont really want to maintain the company past this tax year as i wont be going back to work here through the company. SMP would be a last resort as id rather close the company and apply for MA, though i think the fact he advised to pay PAYE annually instead of regularly even thoughi repeatedly asked how to do PAYE is going to make me ineligible - i tried explaining it to the MA helpline and they just said they needed 13 weeks of payslips which i dont have.

I'm sorry, there's too many variables here to know what is the best advice for you. You need to give all the facts to an accountant you trust.

From the facts you have given you are probably entitled to SMP which means you can't get MA anyway.

Annual pay is not an obstacle to MA as the 13 weeks can be any 13 weeks in the 66 week test period: you presumably have at least 1 payslip in this period.

Hi Mr Anchovy,

Thank you for your help. So yes i would have 1 payslip if i file the PAYE annually as we would normally have done, when i called the MA helpline they told me i would have to provide monthly payslips.

My intention was to dissolve my limited company as there will be no income due to me having the baby and being the only source of income and I am also planning to move countries so it seemed unfeasible to maintain the company just to get SMP (this would be a last resort obviously).

Therefore i wanted to apply for MA as an un-employed person who has worked during the test period. How can i find out if x1 annual payslip would be accepted for proving my income during the test period?

My accountant doesnt seem to be able to advise me on MA he doesnt seem to have the knowledge about it.

Accountants don't generally advise on benefits, although Maternity Allowance is a key benefit for self employed people so this is an exception: perhaps he doesn't have any female self employed clients.

I cannot stress enough how likely it is that there is a better solution for you than taking all of the profit out of the company in 2012/13 and winding it up.

For evidence you can send your last two payslips together with a statement on headed paper of the employing company that your earnings from x to y were £z, amounting to £z / (y - x in weeks) per week.

Good grief did I really write that?

ADVICE

Nonono - I am going mad.

Advise was right course.

I still feel like im in a bad position here based on Accountant advised me at start of year when asked about NICs and PAYE not to do payroll that he advised to only pay myself in dividends. At the end of the year he would do a one off payroll to use the tax free personal allowance.

Following this post i have asked him to run payroll to cover the 26 weeks which is the eligibility criteria for MA. They ran 13 wks then double his price when asked to correct it.

I have a couple of questions:

1. what is the definition of employment for MA / SMP - you can be employed and not paid via PAYE eg as in I am employed as the Director but only earn dividends

1. If i run the Payroll for 26 weeks so that i can have the 13 wks payslips to prove the employment, and am no longer employed by the company going into the 15th week before due date does the employer still need to complete an SMP1 to say why they can not pay Statutory MP? - there is no option on that form to say the employee is no longer an employee of the company.

1. To qualify for MA they look at how much NICs have been paid what is the lower threshold for this?

I can't help you with any problems with your accountant, you should take these up according to his complaints procedure.

Dividends have nothing to do with your position as a director, you receive these because you are a shareholder. They therefore have no relevance for SMP, MA or any other employment-related matter.

1. To qualify for SMP earnings must be paid through PAYE.

To qualify for MA earnings must either be paid through PAYE or you must be registered as self employed in which case you will be treated as having earnings of £150.50pw if you pay Class 2 NI or £30pw if you hold a Small Earnings Exception Certificate.

1. An employer only provides form SMP1 if you are employed in the relevant week.

1. Covered in 1, but as you are not self employed it is not relevant to you.