To not claim maternity pay as it's so complicated?

[soconfused87]

My OH and I are joint directors of a limited company.

I'm due to have a baby this spring and am entitled to Statutory Maternity Pay (rather than Maternity Allowance) as my OH can cover my workload whilst I'm on maternity leave.

However, I'm so confused as to how we will pay the mortgage whilst I'm claiming SMP. Currently we're both paid a salary each month from the company which goes into our separate personal bank accounts (we don't have a joint account). The mortgage comes out of my account each month and the bills - gas, electric, council tax and everything else - out of his.

As I understand it, if I claim SMP I'll be entitled to 90% of my usual salary for the first six weeks, and £145 per week after that while I'm on maternity leave.

The company will continue ticking over and making money under my partner (I hope!) but I assume I won't be allowed to pay myself anything above my allowed SMP. This is going to leave me with a massive shortfall in earnings after the first six weeks that will mean I have too little to pay the mortgage, as the money will be tied up in the company and not paid to me as it is currently.

Some options I thought of were:

1. Pay myself a bonus (dividend?) from the company before I go on maternity leave, to cover the months I have off

1. Transfer the mortgage over to my partner's account and pay him a bigger salary while I'm on maternity leave so he can cover the mortgage

1. Not claim maternity pay at all as I'm so confused about what my options are

1 or 2 would be preferable over 3, but are they actually allowed from a legal point of view? I don't want to accidentally commit fraud!

If anyone has any advice I would love to hear it.

You can pay yourself enhanced maternity pay from your company and still claim the SMP element. For instance if you worked for a big company they would pay the 90% for 6 weeks and then most pay half pay + SMP up till 6 months, but its up to you what the package you give yourself is. I am no accountant though and it is probably need to have a conversation with one before making any decisions!

Option 1 and 2 are also possibilities, however could both result you paying extra tax, particularly if you push your DH into the 40% tax bracket.

Thanks so much for the reply.

Option 1 and 2 are also possibilities, however could both result you paying extra tax, particularly if you push your DH into the 40% tax bracket.

See I didn't even think of that - thanks for flagging it up.

Does anyone know if it would be legal to pay myself a bonus/dividend now to put into my personal savings and cover myself for when I'm on leave?

Completely legal to pay yourself a dividend at any time. Just have to pay the appropriate tax etc :)

If it's you and dh business if u can afford to just take normal pay business can claim back some due to maternity and rest is enhanced maternity pay. As your a director u will still be entitled to dividends for the year whether u work or not as still classed as a shareholder. Best advice would be ask your accountant assuming u have one as they will tell you how much u can take for tax purposes etc

Oh that's a relief - so if I've understood everybody correctly, I can basically just pay myself a large dividend before my maternity leave to cover all costs for the time I'm off!

As a company u can also apply for an advance on maternity pay so it is paid in 1 lump sum at the start rather than every week through PAYE and then claimed at the end

Thank you!

As directors of the company you can write your own policy on maternity and parental pay. You could decide to offer enhanced maternity pay to all your employees, for example And therefore continue to pay yourself your usual salary. You should still pay yourself SMP though because you can claim it back from the government. The enhanced pay would just top it up to your usual salary.

Having said all that, my DH is director of his own limited company and his actual salary is low but he pays himself mostly in dividends, something to do with tax I think.

Do you guys use an accountant? They should be able to advise on the best way to pay yourselves including during maternity / parental leave.

Don't forget pension contributions, too - assuming you are both paying employer and employee pension contributions?

Why is your OH (I'm assuming you're not married) not taking any financial hit whilst you stay at home to look after the child you BOTH made?

You can take out what you like for SMP as long as it doesnt go over your salary for the previous year. Eg you cant say your SMP going forward will be £1K per month but have only previously taken a salary of £500 per month.

However, you can claim Maternity Allowance as well if you pay NI contributions. Speak to your accountant about this as it will affect the SMP you pay yourself.

You can also take out dividends from your company- as much as you like. However, you will be liable for enhanced tax should you do this.

Definitely speak to your accountant who will advise you according to your own personal circumstances.

"However, you can claim Maternity Allowance as well if you pay NI contributions. Speak to your accountant about this as it will affect the SMP you pay yourself."

Utter nonsense. Love it when self-proclaimed "experts" give their made up "advice" on mumsnet!