Maternity allowance & self employed

[Piggy]

Hi

I am planning to become self employed very soon and pay class 2 National Insurance contributions so should be able to claim full Maternity Allowance when the time comes. But I have a question about it - I don't plan to work when I'm on maternity leave but the nature of my business which is website publishing means that the websites I would have created should hopefully still be earning money on their own through advertising (Google Adsense) which would have already been put in place, without me having to actually work on it for a few months. Does anyone know if this will affect my maternity allowance because of the clause that says you're not allowed to work during maternity leave except for a maximum of 10 "keep in touch" days?

Or has anyone been in a similar situation? I guess it's the same as any business/work that can still generate income without having to actively work on it, for example - an author receiving royalties from a book, or a proprietor of a business not working themselves whilst claiming maternity allowance but employing someone to run it for them and the business still generating them an income.

I've looked for the answer to this question everywhere and phoned up Jobcentre Plus who couldn't answer the question even after asking various supervisors! Hope someone can help!

 

[kalia]

I'm guessing here but would it not work in the same way that some employers give over and above SMP? In other words, you're allowed to receive more money, and you would have to pay any relevant taxes and NI on the income, but it's not the same thing as working.

So no problems

 

[Piggy]

Thanks, I'm hoping so - but haven't got anyone to confirm it for definite yet. I expect the earnings from my new business are going to be much less than maternity allowance so would rather have the maternity allowance if it's either/or!

 

[kalia]

Remember that you will also be able to claim child tax credits and working tax credits.

As far as I'm aware, if you rented out a flat you wouldn't have to have it sitting empty while on maternity leave or sacrifice MA and this is the same sort of thing. There is a separate section on tax returns for that type of income.

If I were you I would assume it is fine to have that income as long as you're not actively working. If the Jobcentre can't find anything about it I suspect that means there is nothing to find out. If you can't find someone who says no, then it's a yes

 

[Piggy]

Thanks for your help Kalia. Will look into child tax credit and working tax credit.

I think you are probably right. Just wanted some confirmation from someone really. Don't want to find out later that I have to pay it back after spending it on nice things for baby.

Maybe some of the self employed mums on here can shed some more light on this for me.....

 

[clarem]

Hi Piggy,

I would be careful about what is and is not seen as income by the HMRC whilst you are claiming maternity allowance. I would have thought that the earnings from the websites could be seen as self employed income which would have to be declared. It would then be deducted off your maternity allowance which would be reduced accordingly.

I run my own company, am classed as self employed and have been getting maternity allowance. I have just received my final mat allowance installment and am therefore about to start paying myself an income again from my company. My daughter is nearly 9 months old but I returned to work when she was 6 months old. To get the 9 months maternity allowance I have not been getting paid for the work I have been doing since February. Technically I could have started paying myself 10 working days ago and classed those days as staying in touch days. What I plan to do is pay myself more over the next 3 months to make up for the business not paying me since February if that makes sense. I just did not want to give HMRC any rope with which to hang me if they ever did an investigation on me (as they do spot checks with self employed individiuals). If I had been paying myself since Feb and claiming Mat allowance they would not know at the moment but it could be picked up upon come self assessment form time or as I say if they ever did an investigation on me.

 

[Piggy]

Hi Clare

Thanks for taking the time to reply.

So am I right in thinking that your business can still generate income whilst you're on leave but if you are not paid a wage from your business then your MA is not affected? So in fact business income is treated separately from wage?

I'm not sure if this would be the same for my own business as I wouldn't be employing anyone to run it when I'm on leave - but the business would still generate an income though I wouldn't be working. Alternatively - I think it's possible for me to organise not to receive any payment from my websites during maternity leave, and for it to resume when I'm back working. Do you think this would be OK?

 

[clarem]

I would speak to HRMC about this to keep it all above board so there is no come back on you. My business did stay up and running but I was not working in it or taking any money from it. Although I am self employed, the business is legally set up as a limited liability partnership and I am really not sure on how the legal status of a sole trader (if that is what you are) might differ in terms of generating business revenue for you whilst claiming maternity allowance. Can your accountant shed any light on this?

 

[Piggy]

Thanks Clare. Yes I think it is different for LLP, so I will speak to HMRC and try Jobcentre Plus again.