Taking money out of limited company whilst on NHS maternity leave

[Lastnamefirst]

My partner and I are looking at taking out a big mortgage. We are planning children within the next few years. We work for the NHS as doctors and also have a joint limited company for our external income.

It has struck me that if I am on maternity leave at the time it comes to remortgage we could be in a pickle! I was thinking about keeping money in the limited company and taking it out during maternity leave so that we can prove sufficient income for the remortgage. Would this affect my maternity pay (even if I wasn't working during my maternity leave)? Thanks in advance for any help/advice. I can't really ask my NHS Trust as I don't want them to know we are thinking about pregnancy.

We have a very similar set up.

It won’t affect your maternity pay. It might affect your remortgage, but if you keep some money aside and claim steady dividends, the maternity leave shouldn’t matter.

However! The bank will assume you’ll have childcare costs, and they may deduct that from what they’ll lend you. And they might ask if becoming a parent will reduce your private income.

Speak to your accountant.

You get maternity pay for every employment. They are all separate.

You need to be on PAYE for your ltd company x number of time before you become pregnant and be paying yourself enough to be lower level NICs contributions. I think 16 hours a week on NMW

You can then up your pay to the maximum (I think c. 3k a month) for the 3 months preceding your mat leave to be eligible for the government to reimburse you for the first 6 weeks at 90%

The accountant will know the details.

And when you say remortgage - do you mean buy now, remortgage at end of fix in 2 years?

Because you just do a rate change, you don't need to remortgage so it wont be an issue.

If you have funds perhaps just use it as a deposit reducing the mortgage needed. You will still have to prove where the money came from either way.

@LemonSwan

Speak to your accountant.

You get maternity pay for every employment. They are all separate.

You need to be on PAYE for your ltd company x number of time before you become pregnant and be paying yourself enough to be lower level NICs contributions. I think 16 hours a week on NMW

You can then up your pay to the maximum (I think c. 3k a month) for the 3 months preceding your mat leave to be eligible for the government to reimburse you for the first 6 weeks at 90%

The accountant will know the details.

Weeks 17-25 (or the months which include them) are used to calculate entitlement to SMP.

Doing what you suggest works out as:

1-16: £150 per week = £2400
17-25: £6000
Total £8400

SMP @ 90% for 6 weeks = £3738
SMP for 33 weeks = £4950

SMP paid £8688
PAYE paid £8400
Total £17088
Tax @ 20% £3417
Tax @ 40% £6834
Plus NI plus pension

Net income around £9k? Not going to add much to mortgage affordability.

Thanks very much everyone for your helpful advice.

Malteser71 - great to hear from someone with a similar setup.

LemonSwan - by remortgage, I had meant that when the 2 years fixed period was over I'd then have to remortgage. I didn't realise you can do a rate change. Do you just pick the best rate that the same lender you took the mortgage out with can do? Do they look through your finances again if you have kept up all the repayments?

Presumably I can only get SMP once?

Thanks again

Your Ltd Company can choose to top up your wages in addition to maternity pay. If you are not claiming mat.pay through the Ltd. Company you can still pay yourself a wage through the company paye scheme.

Hi OP,

You get SMP for every individual job. Otherwise employers would argue over who has to pay it if you have two jobs. So everyone pays it.

Yes if you are just picking a new rate and end of the fix their is no financial checks. Just pick a new rate, dont change anything else, and sign the paper work to say everything is the same even if its not

Do speak to the accountant about maximising your maternity pay for the ltd company though.