There are a tremendous amount of things to think of and organise when you’re having a baby. While it’s infinitely more exciting to plan names and organise all of the items you’ll need for your new-born, it’s equally important to plan financially for the new arrival.
This three-part series will give you an insight into some of the financial considerations of being self-employed and on maternity leave. In this article we are looking at Maternity Allowance.
Unless you are also in employment, as a locum doctor you will not be entitled to statutory maternity pay, which raises the question ‘how will I fund my maternity leave’?
Of course there is budgeting – working extra sessions and saving more of your income back to see you through the months of your planned maternity leave. Perhaps you have the support of a partner and have already worked out your financial strategy with them. But were you aware that, as a self-employed locum, you will likely be eligible to claim Maternity Allowance?
Maternity allowance is an alternative to Statutory Maternity Pay (SMP) which is available to self-employed individuals.
To be eligible for Maternity Allowance you will:
• have been self-employed for at least 26 of the 66 weeks before the baby is due
• be classed as earning £30 a week or more for at least 13 of the 66 weeks before the baby is due (these don’t have to be consecutive weeks)
• and have paid Class 2 National Insurance Contributions (NIC).
You will be entitled to between £27 – £145.18 per week for up to 39 weeks depending on the number of weeks you’ve made Class 2 contributions for in the lead up to your maternity leave and the other eligibility criteria.
If you haven’t paid enough Class 2 in the lead up to your due date (which is very possible given the way that the timings of tax returns work out) it may be advisable to pay some of your Class 2 NIC contributions early in order to maximise the amount of maternity allowance available to you.
Now the maximum that you can receive (£5,662.02) isn’t going to compare to working as a locum, but it will certainly help, especially if you’re not planning to work at all during your maternity leave, or are unable to work for any reason. And maternity allowance is a non-taxable benefit so will not increase your taxable income for the year if and when you decide to start locumming again. Still have questions about Maternity Allowance and its interaction with Class 2 NIC? Our specialist medical team are happy to discuss the details of maternity allowance with you.
Next in the maternity series – NHS Pensions.