Paying yourself maternity

[GoooRooo]

Hello - please bear with me as this is quite complicated!

I am currently a sole trader. My accountant has recommended that I become a Ltd company, mostly for tax reasons.

I am pregnant with DC2, due in September. Am I right in thinking that I would be better off financially if I become a Ltd company because I can pay myself a wage during maternity leave, it would be considered a cost to the company and therefore the profits would be less, meaning I pay less corporation tax? Or am I better off staying self employed and claiming statutory maternity allowance?

If I become a Ltd company will I need to do it before I am 15 weeks pregnant in order to do the above?

I appreciate I haven't given any figures in this post so it might be quite hard to advise, but any thoughts are very gratefully received. Thanks.

You can pay yourself SMP through your limited company (I've done it twice). However, as you will become an employee of your limited company you still need to meet the SMP qualification criteria. In other words you need to have been employed for 6 months by 15 weeks before your due date. If baby is due in September, you are not likely to qualify for SMP even if you set up your limited company now.

Thanks Izzy - I've realised I won't be employed long enough by the company to qualify. It'll have to be maternity allowance - what a pain.

I need to set up the Company anyway but I'll do it to coincide with the new tax year which will make things a bit easier.