Maternity Allowance for a company director

[Skripka1979]

Hello all,

I am a consultant and a sole director and employee of my own limited company. I pay myself a salary and Class I national insurance.

My accountant told me I was not eligible to pay myself SMP (Statutory Maternity Pay) when I go on maternity leave in March, as my company will become dormant.

Therefore, I am trying to apply for Maternity Allowance. Since I am an employee of my company, I am not 'self-employed'. I am required to state 'employed' in the form and additionally, fill in SMP1 employer form to state why I can't pay myself SMP1. However, there is no appropriate category in the form for me to tick, i.e. there's no an option saying 'I am a sole employee of the company and my company would be dormant when I am on maternity leave'.

I am lost. Has anyone solved this? Do you have any advise?

Thank you very much!

Hmm can you ask your accountant ? I'm a director of my own limited company but have employees who will keep the business running so bit of a difference situation to you. X

@Dafs123 Thank you! I have asked but it is beyond their scope, they don't know. I called DWP, they don't know either. Maybe worth going to Citizen's Advice?

Your accountant should know how to complete SMP1, but I have just had a look and as you say, none of the options fit you. I would complete the form as best you can, and then send it with a covering letter explaining about the sole director dormant company rules included printouts.

What work around are there for you to keep the company legally trading for the duration of your ML? Then you could be paid SMP?

@bobsyourauntie - thank you! I’ll do that! It seems like it’s a big oversight by DWP/JobCentre, will try to get them to add this option

@TwattingDog I could probably appoint another director. Feels like we shouldn’t have to do it though. Major oversight by DWP, see if I can get them to change the form at some point

For the sake of one form to Companies House, it might simplify your life. Remove the 2nd Director when you go back to work?

That's strange I'm a consultant but basically have a Ltd company employing only myself and I got maternity pay, my accountant sorted it all I didn't have to do anything. It was advanced funding from HMRC. I only had to send my accountant a photo of the form your midwife gives you I can't remember the name now. Sorry that's not helpful

You are surely classed as an employee of your company, and should therefore receive SMP.

I wouldn't have thought your business would need to be dormant, unless your intention would be to not work for a significant period of time.

I was also told I could still do odd bits of work in this period - id go back to your accountant I think they have given you bad info

@doadeer Thank you! I’ll get back to my accountant!

@ajandjjmum Planning ML for only 6 months, so I’ll get back to my accountant - thank you!

Yes, smp should be fine based on your salary (not dividends). That's what I did. Your account tant does not seem to u understand how Smp works.

@BlingLoving Thank you! I emailed my accountant to sort it out.

Skripka it is all to do with the fact that you are the sole director and sole employee and therefore if your company is not generating any income, you may not be able to claim the SMP. A quick google establishes that fact, however I don't know why your accountant hasn't suggested claiming it all up front. It could be something to do with the company being dormant, as I don't think you can run a monthly payroll on a dormant company?

However, your accountant should be able to clarify that for you.

I'm not sure why as sole director and employee there's an assumption that she isn't generating income. eg I have projects that were ongoing while I was on mat leave, managed by freelancers (ie not employees). It's not a given, and certainly not HMRC's issue, if the business is or is not functioning during that time.

My SMP was paid back via PAYE. So the company paid me, but then I didn't have to pay PAYE for quite a long time after.

I presume that because the Accountant said that the company would become dormant, that it is because OP won't be generating any income whilst on leave. Certainly if income is generated it won't have to become dormant, but the accountant must have advised based on what he was told by OP.

Funding can be claimed up front, but the SMP would have to be paid monthly to OP via payroll, and that is probably where the problem lies, if no income is being generated, then company is dormant and therefore there can't be any wages even if SMP is paid up front to cover them?.

I am not an expert on company accounts though. Hopefully OP's accountant can advise more accurately as they are aware of the full facts.

Maybe it's just my business, but as a consultant, it's not unusual for me not to invoice anyone for a while because I'm working on things then suddenly a whole lot of invoices are generated. So if the rule was that no income means company is dormant, that would be a disaster for me.

I invoiced a HUGE amount end September. But in October almost nothing.

Your company can't just become dormant like that if it's been trading within that financial year.

It would be "company is no longer trading" - this would be a more accurate description of the situation.

@bobsyourauntie I have asked my accountant originally to arrange my SMP but he said I wasn't eligible as I wouldn't be generating any income during my maternity leave and the company would be dormant. I will have money in the account however, enough to pay SMP. He then advised me to apply for MA, but I ran into difficulties with the forms. Clearly, the process is not designed for female directors. Following everyone's advice in this thread I contacted my accountant today, and waiting for his response. Thank you so much!

@skripka - A lot of small business accountants don't have a clue. Sorry. Depending on his response, you might need to get different advice.

Mine came in 3 big installments and my set up sounds the same as yours. If your accountant isn't helping speak to someone else. I've honestly just been through this myself

@doadeer - thank you! Feel free to say 'no', who is your accountant if you don't mind me asking. I'm wondering if they would do a one-off paid phone consultation with the view of me switching to them.

No I don't mind at all they are in Old Street London here is their website

www.litchfields.co.uk

Good luck!

@Skripka1979 , sorry to open an old thread, but were you able to get SMP or Maternity Allowance in the end? We might be in the same boat (advised we can't get SMP due to being a sole director/employee, but not being able to fill in the SMP1 form as that reason isn't listed!