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Stories from an Accountant

Oh Baby, But I’m Self Employed!

Oh Baby, But I'm Self Employed - Account-ant

Trigger Warning:  This Blog is about Maternity Leave and Self Employment.  

Maternity can be a tough subject for some people and I sincerely do not wish to upset or distress anyone.

I’ve been asked about Maternity Cover, Childcare and how to get Leave whilst Self employed a few times recently, so I thought it was about time to pop it in a blog post.

So in my usual style…..Meet Katie. 

Katie and her partner wanted a child for a long time and decided to take a break from family planning for a while.

Katie is a florist who worked for a chain of florists, and was an employee.

About 6 months ago an amazing opportunity came up to buy a business. 

Obviously, the initial set up costs were large (making a sizeable dent in the savings), but her shop is in a great location and she should recoup quickly.

2 months ago Katie had a rough day, she was feeling a bit off and thought she might just be a bit run down…

Days turned into a week, the week turned into a month….SURPRISE! 

What Katie had been waiting for, for so long, was now about to happen! Time to Celebrate…..

But wait… Katie is self employed now…

How on Earth does she take Maternity Leave? Does it even Exist? What about childcare?

Rachel Account-ant

Katie and her partner asked me to look into everything, in order to dot the I’s and cross the T’s before the arrival of their bundle of joy.

Firstly… congratulations and secondly… this is a bit sexist, however…

If you are female and carrying the baby, then you can apply for Maternity Allowance

If you are Male or Female, your partner is pregnant, and you are self employed, you DO NOT get Paternity Leave (bummer!). 

Maternity Allowance

This payment comes straight from the Government and what you can gets depends on how long you have been self employed.

You MUST:

  • Have been self employed for 26 weeks of the 66 weeks before the due date
  • AND earned at least £30 per week for 13 of the 26 weeks. 
  • AND you must be paying Class 2 for at least 13 weeks of your pregnancy

Read that again and let it sink in.

You will need to submit a form called CA5601 which can be found here: –

https://www.gov.uk/government/publications/national-insurance-application-to-pay-self-employed-national-insurance-contributions-by-direct-debit-ca5601

Your other option would be to wait for your self assessment and pay NIC then. However, with the birth looming, it’s best to apply and get those payments rolling. Then you’re way more likely to receive Maternity Allowance.

How Much?

You can get lots more detail on the gov.uk website, but in essence you’ll get £151.97 per week or 90% of your average weekly earnings – whichever is lower for 39 weeks.

Applying for Maternity

Once you’ve reached 26 weeks you need to apply for maternity allowance.

Go to https://www.gov.uk/maternity-allowance/how-to-claim and fill in an MA1 claim.

You’ll need

  • Proof of income (your SA302 tax self assessment print out)
  • MATB1 Certificate from your Midwife (showing proof of due date)

Once submitted it will take a few weeks to receive a yay or nay.  You can appeal if it’s not a desired response.

Argh – I don’t have an SA302!

Katie started her business 6 months ago (so in the last tax year), so will need to complete her self assessment BEFORE applying for Maternity Allowance.

If you’re reading this and you started your business in THIS tax year (i.e. after 6th April 2021), you’ll need records of your expenses and income from the start of your business to date.

Child Benefit

You are entitled to £21.15 per week for your first child and £14 per week for any subsequent kiddos.

If you don’t have children yet, this may seem like a lot, but disposable nappies and 3am spending sprees cost a lot… I personally remember buying cool baby grows at 3am, whilst watching Glow (Glamourous Ladies of Wrestling) on Netflix, when our child was a week old 😊.

Childcare

You’ll have heard that childcare is REALLY expensive, but it doesn’t really register until after you’ve had your first child, and start to look around at options.  

At the time of writing, it was roughly £50 per day, before any tax benefits are taken off.

If you earn more than minimum wage through employment or self employment, you will be entitled to tax free childcare, but, if you have a partner, they must be employed or self employed and earning more than minimum wage, OR be a student. 

If only one of you is working or earning less than minimum wage, then you will not get tax free childcare.

You may be entitled to other benefits, but Account-ant is in no way an expert in this matter.

When your child turns 3, your free hours kick in for the term after their birthday.  At the time of writing, this was 15 hours if one person is employed (and earning more than min wage) or 30 hours if both partners are working for more than minimum wage.

Parents living apart would need to look at the government website or Citizens Advice Bureau for more information.

I really hope this blog has waylaid some of the worries that may come from being self employed and about to embark on one helluva rollercoaster (also known as parenthood). Enjoy every second. It is surprising how fast it can go!

As a Mother of a toddler myself, I understand how much work it can be, and I will always be there for anyone that needs a sounding board on work vs children.  Give me a shout and we’ll have a cuppa!

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