Maternity pay for self employed people - help!

[lovecloud]

Hello

I run my own business and never looked into my maternity rights before.

I have read in a leaflet - which i cant find that as long as my nat ins contributions are up to date and i have worked 30 hours per week for 20 weeks before my due date then I am eligible for maternity pay of £106.00 per week for 40 weeks - is this right???

I have probably got it wrong, I did call inland revenue but they told me to contact my local job centre - but they were useless!

Also is it possible whn on maternity leave to hire someone to replace me to keep things going? Obviously they would be receiving the main bulk of money but I would still receive some money - not enough to live on. I wonder what the maximum earnings you can bring in is to still receive the maternity pay.

Hope anyone can answer my questions.

Yes you are right re being eligible for the £106 maternity money.

Are you a sole trader or a limited company? If you are a ltd co then you are strictly speaking an employee and are entitled to maternity PAY (ie you are your own employer so effectively pay yourself and then claim it back as any other employer does) whereas as a self-employed person you get maternity ALLOWANCE which is just paid out like any other state benefit.

However you won't be able to receive any income from your business while you're receiving maternity pay. I got round this by asking people to pay me after 6 months in one lump sum.

Could you get your replacement to invoice your clients direct and then make you a one-off payment after your maternity pay has finished?

think you are entitled to the stat maternity pay as you suggested. sounds to me as though you would be employing someone to cover a maternity leave, which is totally OK. the business would be getting the money earned by your replacement and what you pay yourself as a directors dividend is up to you i think. but it is only what i think and i expect your accountant is your best option for the right info.

falala's advice is right if you are a limited company, but not if you are just a sole trader. If this is your situation, you could legally employ someone as an employee, but this would mean rafts of other paperwork and legal stuff you may not want or need to get into.

Your accountant, if he/she is any good, would be able to tell you the best option.

yes, sole trader is another kettle of fish entirely.

Hello

I am a sole trader and I was going to hire someone who is willing to register as self employed.

The money that I would earn after they had their share for covering me would only be about £60-80 per week.

This money would need to go into my business anyway, I would not be able to take this money for my own drawings.

So really it should not count, but I wonder how i could prove this?

There must be a limit of what your business brings in. I guess there are sole traders who just totally shut down during their maternity but there have to be many that cant like me.

Hi Lovecloud. I am a sole trader and have claimed maternity allowance (which is what you'll be eligible for instead of maternity pay) twice now.

this gives you some info on maternity allowance

You won't be able to invoice clients at all within the dates of your maternity leave.

If you hire someone else to do the work on a self employed basis they will be subcontracting to you. You can pay them during your maternity leave but you would have to invoice your client for them to pay you. But you would not be able to do this within the dates of your maternity leave (by which I mean the dates between which you are claiming MA)

If your cash flow can stand it, could you invoice your client/s in one go at the end of your maternity leave? Or beforehand? (I suppose it depends on the sort of work you do).

In your situation it's the paperwork that matters and the date at the top of the page! You can carry on paying your suppliers and the electricity bill etc while you're claiming MA but you can't earn (ie invoice) any money yourself.

As a sole trader you ARE your business, the Inland revenue and DWP do not make any distinction between you and your business, so saying you're not taking any for your own drawings would cut no ice.

I didn't totally shut down during my maternity leave but any work I did do, I invoiced after I finished claiming.

What is your business and what do you do?

I did the same as Wordsmith. I also took out a bank loan
Think it is appalling that the self-employed have so few rights. Why can't I get the same pay as anyone who is employed? It's not like I don't pay tax.

Thank you wordsmith!

On your link it states
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How do I claim?

Claim as soon as you can after you have been pregnant for 26 weeks. If you claim more than 3 months after the date your MA is due to start you will lose money.

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I will hopefully work up to 8 months pregnant so will this mean I will lose out on receiving somne of the benefit?

It is confusing - or i am probably just being thick!

No, you can start your MA the day your baby is due if you want. It's up to you.

True cattle, but you don't pay nearly as much tax as someone who is employed either.

I had my second child in April 2004 (handily born on 5 April, the last date of the tax year) and I paid NO tax last April (05) and will pay NONE next April either. (I'll have to pay 18 months worth in April 07 but that's a different matter.)

My income fluctuates from month to month. I suppose if you are a sole trader and have a regular monthly income then you might feel differently.

I can claim for loads of things than an employed person can't. All my car expenses, most of the petrol, depreciation, a portion of my mortgage and bills, any software or hardware (even if I'm buying a computer for my children)....everything except the one thing that enables me to run my business in the first place, ie childcare costs.

Don't mean to come out in support of the Inland Revenue and DWP at all by the way, they piss me off too.

Claiming child tax credits is a nightmare - I can never tell them how much I'm going to earn until I've actually earned it.

But I actually DO have more expenses than someone in an office. I have to buy my own computer, paper, books, all the magazines I used to read for free etc etc.
I still think I should be entitled to the same six weeks at 90% that anyone else gets.

And my heating bills are much higher, ditto telephone etc.

No you can start claiming MA as late as you want - the day your baby is due if you want (and are a total masochist!)

What that means is you can fill in the form and make your claim from 26 weeks. On the claim form it asks you to state the day you want to start claiming from.

I would fill in the form asap, because you never know how long it's going to take for the jobcentre to get it moving...

And of course you pay no tax if you aren't earning! That applies to employed people too!

so maternity pay is non taxable?

I understand your point Cattle, but as a self employed person you set your own 'salary' - if you could do the 90% of salary claim thing, what's to stop you from inflating that figure to double or treble what it actually is for the purposes of the claim? And how would the DWP be able to check on it? You can pay as much from your trading account into your personal account as you like if you're your own boss.

It's swings and roundabouts with self employment. Much more flexibility, more potential to earn more, but less security, and the potential to earn nothing. That's the trade off. Always has been and always will be!

i like your style

Yes, it's non-taxable.

Cattle, I'm not trying to start an argument. What I meant was, I was on maternity leave from March - Sept 04. But I paid no tax at all for the whole tax year 04-05 (due in Apr 06) and nothing for 03-04 (nothing to do with maternity leave, just my accountant managing to get my profits down to below the £4500 tax threshold. I actually turned over around £18K and kept most of it.)

It was all totally legit and nothing dodgy about it at all.

You can write off your additional heating, telephone etc against tax so it's not relevant to cite those as additonal costs that an employed person wouldn't have to bear.

Cheers Lovecloud! What is your business by the way?

No, I wasn't eligible for paying myself maternity pay, because I'm not a limited company, so it would be easy for the Inland Revenue to see what my average earnings are from my tax returns. I don't see any difficulty at all there.
I do think the additional costs are relevant because that's WHY self-employed people can count them against tax! It's not a perk to count my phone bill against tax when I have a huge phone bill because I use it for work, or an inflated heating bill for the same reason. Yes, of course there are advantages - like being able to pick up my ds from nursery - but I don't see why those private and personal advantages should mean I shouldn't have the same rights as any other taxpayer who has a baby.

Teaching music.

And yours?

When I worked for an employer during my first maternity leave, I was very well off, able to relax and not get into debt. During my second maternity leave, it was a total financial disaster because I am self-employed. If we hadn't had a legacy during this time it would have been a complete disaster as I am the main earner in our house (normally) and to only get £106 a week was pretty devastating.

I don't have a 'trading account'.

Cattle - I agree maternity leave when you're self employed can be a disaster. That's what I meant about less security. I just can't see how the 90% thing could be regulated. If it could, I'd be first in line to claim it, don't worry! (if I was going to have any more kids, which I'm not!)

Re the average earings from your tax return - I suppose you could average those out, but I only had 2 self-employed tax returns before I had my first child, both of which were for very good years, financially, so 90% of the average weekly income would be quite good. With my second child, the intervening four years tax returns were about 50% of the first two years, so are you saying I should have got 50% less maternity pay?

Pus as a self employed person, INCOME is often very different from PROFIT (ie what you pay tax on). My profit for 04-05 was £325 for the year. I certainly earned more than that though!

I have a business account that's separate from my personal bank account (which is a joint a/c with my DH), If you don't have one then how can you tell what your 'salary' is? Do you think you should be able to get 90% of your income (ie the money you keep) as maternity pay, or 90% of your taxable profit? If that was the case for me I'd get f-all! So I'm thankful for my £106/week.

Regarding expenses, you CAN get away with more than an employed person. An employed person, generally speaking, drives their car or takes the train to and from work and pays for that with their after-tax earnings. They buy a computer for little johnny to do his homework and can't put it though their boss's books. I have put a digital camera, DVDs, postage, loads of things through my business beacuse I needed to use them for business ONCE and then kept them for my own personal use.

Lovecloud - I'm a freelance copywriter/PR consultant.

I guess all I'm saying is, if you asked me to tell you what my weekly salary is, I wouldn't be able to. I work mainly on a project basis, so some weeks/months I can earn thousands, and some I earn nothing. If you earn a regular income (lucky you) it would be different, but you can't have one rule for sole traders who would find it quite simple to state their weekly salary, and another for those like me who don't have a clue.

Why don't you become a limited company - then you would have the same employment rights as an employed person?