Maternity pay question - travel allowance

[crunchiemunchies]

hello, does anyone know if travel allowance counts as part of your earnings for statutory maternity pay?

i got a promotion 2 months after I started mat leave and so my work have recalculated my SMP based on the ‘alabaster’ ruling. With my promotion my salary has gone up, but I also have a new £2k travel allowance. It is set out in my contract under a heading ‘additional pay elements’ and just says ‘you will receive a travel allowance of £2k gross pa paid monthly in arrears subject to deductions for tax and national insurance’. I have checked with my work and they said that I will receive this sum automatically each month regardless of whether or not I travel.

When recalculating SMP my work have only taken into account my increased salary, but not the travel allowance. Is that right? Or should it form part of earnings for SMP?

I think travel allowance is basically a tax/pension dodge for the company if it is paid each month regardless, so don't think it counts for maternity calculations.

Normally I would think that but if the contract says it's subject to deduction for tax and NI it may be a different situation. Have you been getting the full amount or has your employer deducted tax on it?

Thanks, I’ll see if I can get hold of my payslips to check. If tax/ni has been deducted, where does that leave me with the SMP? Should the travel allowance be counted as part of my earnings?

This is what I've found:

"Earnings can include holiday pay, overtime, commission, bonuses, arrears of pay or other sums paid during the SMP calculation period on which National Insurance contributions are paid."
https://maternityaction.org.uk/advice/maternity-pay-questions/

So if you're paying tax and NI on the travel allowance, I believe it should be included.

If Class 1 National Insurance contribution then I believe so. You should be able to find out from your payslip.

Obviously I'm not an authority, but from https://www.gov.uk/guidance/statutory-maternity-pay-manually-calculate-your-employees-payments#work-out-average-weekly-earnings :

"Average weekly earnings must include all earnings on which Class 1 National Insurance contributions are due, or would be due if they were high enough.

Statutory Maternity Pay entitlement depends on your employee’s average weekly earnings in the ‘relevant period’.

The average weekly earnings in the relevant period must not be less than the Lower Earnings Limit for National Insurance contributions which applies at the end of the qualifying week. The Lower Earnings Limit for 2025 to 2026 is £125"

This is really helpful and what I suspected, thanks! Need to try and get a copy of my payslip now