Self-employed (contractor) time off after having a baby

[jusm789]

Hi all, new here so apologies if this isn’t the right place to post this…

So I found out last month that I’m pregnant (first baby), and I’m just over 9 weeks now so still early days. The pregnancy wasn’t planned, but we had talked about thinking of trying next year.

I’ve been working as a contractor for the past year (via my own Ltd company), and had planned to go back to a perm role before TTC so that I’d be eligible for maternity benefits, but that hasn’t gone to plan, and obviously as a contractor, I’m not entitled to such benefits!

My current plan is to continue contracting for as long as possible during my pregnancy. I have personal savings, and money in my company which I can use to “pay myself” for food/bills/mortgage etc after the baby is born whilst I’m not working, as well as my partners salary, although I am the main earner.

Just wondering if there’s anyone who’s had a similar experience who could tell me how they handled it. How long did you take off after the birth? Did you go back to contracting/self employment or take a permanent role? Did you go back part time or full time?

Thanks in advance for any responses, really appreciate any advice on this :)

Assuming you've been paying yourself a wage via PAYE scheme for the requisite amount of time through your limited company, you'll be entitled to statutory maternity pay via your company, for which HMRC will reimburse your company.

Thanks for the reply :) I’ve not been paying via PAYE scheme, I’ve been taking a small salary each month, and the rest in dividends. So I believe this means I’m not eligible for SMP.

You might still be eligible for Maternity Allowance—check this link from gov.uk.

I was in your position 10 years ago but had made voluntary NI contributions, so was entitled to MA. Skim reading the above link it looks like they don’t even require that anymore.

I had been having a look in to the Maternity Allowance, I’ve just found a calculator from that link you shared, so that’s been useful — thank you! :)

Although I have just checked and I think I would only be entitled to the minimum of £27pw, which doesn’t go very far!

Yes, but what can you expect when you have been minimising your salary, to extract dividends instead, and hence paying minimal NICs? You can’t be surprised, surely?

No, you’re right I’m not surprised don’t worry! My original post was more to hear experiences from those who’d been in a similar situation and how they returned to working again :)

This was me.

1. My limited company paid me a salary and therefore I could claim SMP based on that. I increased that salary prior to having the baby (reduced dividends) which allowed me to qualify for SMP. I've actually kept the higher amount ever since as a way to reduce the risk should something happen to me - my life insurance doesn't pay me for dividends, only basic pay so yes, there's a tax downside, but it's worth it to know I've got more protection should I need it.
2. I phased my client work on return. I was quite new to the LTD/contractor thing so had 2 main clients and a few ad hoc clients. One client I agreed I would stop working with entirely for 3 months. The other one I outsourced the bulk of the work but oversaw it. So it wasn't great - I remember attempting to pump milk while DD slept next to me aged 10 days while I was sending emails - but it meant I still had some income coming in.
3. Like you, I had a little bit of a buffer which helped.

But learn from my main mistake - once I got pregnant, and admittedly, it was a difficult pregnancy which didn't help, until well after DD was born, I really struggled to focus on my business. so I had a buffer to help with the bills and I had these two main clients but pretty much for 18 months I did NOTHING to help me grow my business further. And THAT is what came back to bite me a year or two later. Looking back, it feels like I started a business twice - once when I first did it and then again 6-12 months after DD was born.

Also, for me, none of this would have been possible if DH hadn't stepped up as the primary parent. He was already a SAHD to DS at the time which helped a bit as he already had a bit of a routine and a network, but it was hard. People don't expect to see a man with a newborn out and about in sole charge. Sometimes comments were all, "ooh, how wonderful you are" but a lot were a bit more pointed about baby not being with mum when she was so small. It's really hard to go back to work, even part time, when the baby is really small unless you have great support at home, so think about that and how you'll handle it.

Good luck. And congratulations!

Thank you so much, Gerbils, exactly the kind of advice I was after :) really appreciate such a thorough response as I’ve not been able to find much help online.

There’s a lot for me to think about so I’ll definitely take this on board. My current contract ends at the end of February, so I’m going to have to find another shortish contract to take me up until the birth, and then decide what to do when I’m ready to return to working. It’s still early days so I have a while to ponder my options at least! Thanks again :)

If you are working through a LTD but only for one company at a time, be careful about that as unless you're doing very short term contracts, you could then be classified as an employee and the way you're paying yourself currently is not actually allowed. I have no idea how HMRC review these things but I imagine that if you're applying for SMP via a LTD, that could generate a flag.