Challenges Self-Employed Face With Tax Delays & Maternity Claims (Made Simple)

Alan Bermingham

10 Years of Expertise in Fintech Innovation

4 min read

What you need to know

Having a baby while running your own business comes with unique challenges. Between preparing for your little one and keeping your business ticking over, the last thing you need is confusion about your maternity benefits.

Pie tax helps thousands of self-employed parents check their maternity benefit eligibility automatically. Or if you're just here to get to grips with it all, let's break it down!

What Is Maternity Allowance and Statutory Maternity Pay for the Self-Employed?

Maternity Allowance is a government benefit that supports a self employed person who doesn’t qualify for Statutory Maternity Pay. Unlike employees, self-employed individuals are not eligible for Statutory Maternity Pay and must apply for Maternity Allowance instead. It’s not a loan - you don’t need to pay it back.

Currently, you can receive up to £172.48 per week for 39 weeks (2023/24 rate). The amount you receive is based on your self employed earnings during a specific period. This gives you financial breathing space while you focus on your new arrival.

Unlike other income, Maternity Allowance isn’t taxable. Occupational maternity pay is a separate benefit provided by employers to employees, and is not available to self-employed individuals. Every penny goes straight to you without HMRC taking a cut.

You can start your Maternity Allowance from 11 weeks before the expected week of childbirth, which is the week your baby is due to be born. Most self-employed mums begin closer to their due date to maximise time with baby afterwards.

How Tax Delays Can Impact Your Maternity Allowance

The biggest headache for many self-employed parents-to-be is proving eligibility when tax records aren’t up to date. Eligibility for Maternity Allowance is assessed based on your NI contributions for the relevant tax year. Your entitlement hinges on your Class 2 National Insurance contributions (also referred to as class 2 nics).

HMRC processing backlogs can mean your NICs haven’t been properly recorded. This creates a frustrating catch-22 situation just when you need financial clarity.

The Department for Work and Pensions (DWP) needs to verify your contributions during the “test period”. This is typically the 66 weeks before your baby’s due date. Both class 2 nics and other ni contributions are considered when assessing your claim.

If HMRC’s records are incomplete, your claim might stall. Tax return delays can be particularly problematic if you’re applying close to your due date. Your actual earnings, as reported to HMRC, are used to determine your entitlement. Many self-employed mums find themselves making calls to both departments. I remember spending three hours on hold while eight months pregnant.

Eligibility Requirements Made Simple

To qualify for Maternity Allowance as a self employed person, you must be registered as self employed with HMRC. One key eligibility criterion is the employment rule, which means you need to have been self-employed for at least 26 weeks during your 66 week test period. This period ends with the week your baby is due.

You must have paid Class 2 National Insurance contributions for at least 13 of those weeks, and you can often make voluntary contributions to fill any gaps, alongside exploring options for understanding Class 3 National Insurance voluntary contributions to protect your state pension record.

Your average gross weekly earnings need to be at least £30 during any 13 week period within your test period. This is known as the earnings rule, and your average gross weekly earnings are used to assess this. If your earnings are low, you may still qualify by holding a small earnings exception certificate, which treats your weekly earnings as £30 for the purposes of Maternity Allowance.

You’ll need your MATB1 certificate (also known as a maternity certificate) from your midwife or doctor as evidence of your pregnancy. This is usually provided around 20 weeks of pregnancy. If you’ve recently stopped self-employment, you might still qualify. You simply need to meet the other criteria within the test period.

Claim Maternity Allowance Without the Stress

The MA1 form is your ticket to claiming Maternity Allowance. This is the official maternity allowance claim form and claim form required by the Department for Work and Pensions (DWP) to claim maternity allowance. You can download the maternity allowance claim form (MA1) from GOV.UK or request a paper copy from the Maternity Allowance helpline.

To claim maternity allowance or claim MA, the sweet spot for applying is around 14 weeks before your due date. This gives enough time for processing while ensuring your recent tax information is included.

Gather evidence of your self employment before claiming MA. Your UTR number, Self Assessment returns, business bank statements, and your bank account details (for payments to be made directly to you) can all help speed things up.

If you haven’t submitted your latest Self Assessment when claiming MA, mention this. Provide any alternative evidence of your work to strengthen your application. Keep copies of everything you send and note down any reference numbers. Pregnancy brain is real, and these details might come in handy!

Beating the Processing Delays

Submit your Self Assessment returns promptly, even if your baby’s due date seems far away. This ensures your NICs record is up to date when you need to claim.

If you’re experiencing delays, contact both the DWP Maternity Allowance team and HMRC’s Self Assessment helpline. Sometimes a phone call can help join the dots between departments. In some cases, HMRC may accept late registration for self-employment, which could affect your eligibility for Maternity Allowance, so it’s important to discuss this with them as soon as possible.

Create a simple spreadsheet tracking your communications. Note who you spoke to, when, and what was promised if you need to escalate matters.

Ask for written confirmation of any advice given. This is especially important if someone tells you to “just wait” while pregnant and without income.

You can request an urgent assessment if you are close to your due date or already past it, and do not be shy about explaining your situation while reviewing comprehensive guides on how to claim Maternity Allowance to ensure all criteria are met. Don’t be shy about explaining your situation. If your claim is denied, you can request a mandatory reconsideration before moving on to a formal appeal.

Financial Planning While You Wait

Build a buffer fund if possible, aiming for at least two months of essential expenses. Processing times can vary widely, especially if there are complications.

Check if you’re eligible for other benefits such as income support, employment support allowance, working tax credit, or child tax credit while you claim Universal Credit. These benefits are calculated differently and might provide interim help, especially if your family income changes during this period.

Keep your business and personal finances clearly separated during this period. This makes it easier to demonstrate your earnings if questioned.

Consider reducing your business activity gradually rather than stopping abruptly. This approach can help manage cash flow during the transition. Talk to clients or customers early about your plans, as many will be supportive and might offer arrangements that help both parties, while also claiming working from home tax relief for your business expenses if you operate remotely during pregnancy.

Final Thoughts

Getting your Maternity Allowance sorted doesn't need to be complicated, but it does reward forward planning. The earlier you get your tax affairs in order, the smoother your path to benefits.

Remember that both HMRC and DWP have processes to help pregnant women access their entitlements. Be persistent but polite if you hit roadblocks.

Most importantly, try not to let benefit worries overshadow this special time. With preparation and the right information, you can focus on what really matters welcoming your new arrival.

Pie tax: Simplifying Self-employed Maternity Allowance and Tax Delays

We understand that claiming maternity benefits shouldn’t add extra stress during pregnancy. The UK’s first personal tax app makes this process clearer.

Our system automatically flags when you might be eligible for Maternity Allowance and helps calculate the rate maternity allowance and full rate maternity allowance you may be entitled to. The app tracks maternity allowance payments and can help manage self employed work during the maternity pay period, including for users who are a self employed spouse or involved in a civil partner's business.

The app clarifies how employer pays, paid smp, pay smp, and smp paid affect your entitlements, and how pay rises, pay rise, holiday pay, and pension contributions are factored in. It also provides guidance on shared parental pay and sick pay as they relate to maternity benefits.

Direct HMRC filing through Pie tax means your Self Assessment is processed promptly. This reduces delays in verifying your Maternity Allowance eligibility. Fancy seeing how we can help? Take a peek at our app to see how we’re making tax less taxing for parents-to-be.