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.

Why would I need a trading account? I get paid what I get paid, it all goes in my bank account (and straight out again, sadly!). It's easy to see what I get paid!
And yes, of course I would expect to get less at 90% of salary if I earned less. That's exactly teh same for everyone, employed or self employed. The more you earn, the more your 90% slice is. And the £106 is the MINIMUM for everyone. You can't get less than that, so if you earned less, you would still get £106

Just to add, i am a childminder and had to make sure i had paid NI for 24 weeks BEFORE my 26th week of pregnancy. I claimed £106 from 26 weeks as i gave up work then. For my Tax Return i HAVE to include ALL my maternity pay as taxable income ie 106x26 which will just put me over my tax allownace for 2005-2006 BUT as far as Tax credits are concerned they do not include the first £100 of MA in your total income for the year! Very confusing!

i thought maternity pay was non taxable?

im confused!

Maternity pay is non-taxable. Bonkerz, it would seem you were badly advised.

Afraid I agree with Bonkerz. Maternity pay is taxable, in the sense that it is included in your total earnings for the year, which are then used to calculate how much tax you owe. They're just not taxable in a PAYE sense as we don't pay PAYE as self-employed people.

I have to say wordsmith that you might put a lot of things that are really personal expenses, which you've used once for your business, through your books, but I would never do that - it just seems dishonest to me.

Am also interested in your comment about putting part of your mortgage through your business. I am right in thinking aren't I that that means that you could be liable to pay capital gains when you sell your house, as it is classed in part as a business asset?

Aloha - agree with you on the trading account and 90% bit - I can't see any need for a separate trading account as a sole trader - mine all goes straight into our joint account. Wanted to pick up on your comment about not being able to get less than £106 though - for MA it is possible. You get either £106 or 90% of your average earnings during the 13 week period that you use for calculation purposes, whichever is the lower. This of course demonstrates your point that they could use the 90% rule if they chose to!

Lovecloud - the green and purple NHS pregnancy book has a page near the back which explains MA quite well. Would suggest that you have a look.

Tabs, that's the first time I've heard that - my accountant has never used my maternity allowance towatds calculating my income. Are you thinking of maternity pay rather than allowance? It states quite clearly in the MA guidelines that it is non-taxable. Therefore it is not counted as part of your total income for tax purposes.

Re items I have used for personal use - I have only bought them because I needed them for business. I needed a digital camera for business three times last year. Am I then not then to use it for personal use? I'm not stying I have bought a computer for my son through my business. I have bought a computer for business. But my son uses it as well. Should I buy another one of those? How about all the posters on MN who use their office computer to post? At least I'm paying for the internet bill!

I claim for 1/7 of my mortgage as one of the rooms in my 7-room house is my office. Ditto heating bills. These are all guidelines as laid down by the Inland Revenue. If it's disgonest, take it up with them!

Sorry about crap typing...

Hi Wordsmith - think I might have caused offence with my last post, which wasn't my intention. The way you describe your purchases in your last post sounds quite reasonable - it was your earlier comment 'any software or hardware (even if I'm buying a computer for my children)' that sounded dishonest.

I will double check on the maternity allowance being taxable or not. I don't start claiming it until Feb, but had just assumed that it worked the same way as SMP in terms of it still being income.

My question about the mortgage was genuine curiosity. Both DH and I are sole traders, but neither of us have ever claimed mortgage costs (DH claims some heating etc). I recalled that he had had a conversation with our accountant about it initially, and concluded that he couldn't claim without said capital gains impact, and so I've never asked for myself. Would hate to think that we were missing a trick if it is possible!

Hi Tabs, no offence, I was just in a rush!!

No, maternity allowance is different to SMP, it's regarded as a state benefit so it's not taxable.

I would check again about the mortgage. If you work from home you can claim for a proportion of it depending on how many rooms you use etc. I've claimed for it for the last 8 years!

As for what you could claim against tax - they key there was that you can feasibly claim these things, not that I have. The anomaly is in the things you can't claim for, like childcare!!

No, you don't need a trading account - but it just makes it simpler when it comes to do your accounts, I've found.

Re the 90% of salary thing - MA is not related in any way to your earnings. It's claimed by self-employed and unemployed people and those who haven't been employed by their co long enough to claim for SMP. Therefore the 90% thing is incalculable. It's a completely different kettly of fish to SMP - have a look at the link I posted below.

Plus I think the thing about part of your house being a business asset etc only occurs when you have to modify it or use it for commercial purposes, ie you turn your front room into a shop or your garage into a car repair business. That also affects things like council tax and the like. If it's just an office then it's not classed as commercial premises.

I did all my paperwork a few weeks ago as i am currently on Maternity leave and not due back till april 2006 so now seemed like a great time to do tax stuff seeing as i wasnt going to earn anymore money this tax year. I rang the self employment people at the tax office to ask specifically if my Maternity allowance had to be included towards my total income for the year and was told that YES it is included as INCOME and therefore is TAXABLE, luckily it doesnt make any difference to me as my earnings for 2005-2006 and my MA together still come in under the tax bracket anyway!
Ring the helpline for self employed people on

08459154515

Well that is totally contradictory advice from their own publications and websites! All I can say is I have claimed it twice in the past 5 years and it has not been counted towards my taxable income. I saw my accountant last week to go through my 04/05 figs and asked him the question again, and he emphatically said NO, it is NOT taxable.

Do we have a tax inspector here who can sort it out? Or does the inland revenue not even know itself?

I went on a self employment tax course the other week and asked the question about MA and was told that I don't have to mention it on my tax return and my business can continue to earn money whilst I am on maternity leave and claiming MA. I can also pay someone else to do my work and they would then have to declare the earnings on their own tax return.

Regarding expenses when working from home, I was told that I could claim a percentage of the heating and electricity costs based on the number of rooms in my house (excluding the kitchen and bathroom) and whether or not anyone else in the house used the room and for my IT equipment and internet access costs a percentage based on the time I used it for my business and whether or not anyone else in the house used it.

Hi there,

I am looking at going self employed from January onward. My self employed job is seasonal so i work about 7 months out of the year and then have a part time job in the evening which i do throughout the year.

I am looking to go register the company - sole trader or limited I do not know but wondered if I was to take the maternity allowance of 9 months would i be able to employ someone to work for me in my home for part of the 7 month self employed period? Would i be able to oversee their work but not be involved too much in the work. Should they be paid with PAYE or register themselves as self employed. What happens if the company makes a profit in that period which of course it will, am i still allowed to keep those profits even if i'm receiving my maternity allowance?

So confused by the whole thing. Is is worth going on the self employed route at all?