Self-employment has risen dramatically in the UK in the last few decades. In 1975, 8% of workers were self-employed, according to the Institute for Fiscal Studies. By 2019, this had increased to more than 14%.
Being self-employed isn’t for the faint-hearted. Striking it out on your own, coping with often sporadic earnings and dealing with tax returns isn’t easy. However, self-employment can come with many benefits, including creative freedom, flexible hours and a better work-life balance. For parents, this can make it easier to balance caring responsibilities with your work, do school runs and look after a sick child.
When it comes to maternity or parental leave, things can be a little trickier. Concerns about how to cope financially without statutory maternity pay – as well as what self-employed workers are entitled to – are common.
What maternity leave and pay are you entitled to as a self-employed worker?
“I navigated this in 2015 when expecting my third daughter, shortly after leaving my corporate career to develop my coaching and training business and it's daunting,” says Laura Trendall Morrison, founder of the GameChanger Consultancy.
To be eligible for statutory maternity pay, you must have a full-time employment contract with a company that pays you through PAYE and deducts national insurance and tax for you. Maternity allowance is a benefit specifically for those who don’t meet the eligibility requirements for statutory maternity pay, including self-employed people.
You might get maternity allowance for 39 weeks if you’re employed, but cannot get statutory maternity pay, if you’re self-employed or if you’ve recently stopped working.
In the 66 weeks before your baby’s due, you must also have been either employed or self-employed for at least 26 weeks, or earning £30 a week or more in at least 13 weeks. The 13 weeks do not have to be consecutive.
To get the full amount of maternity allowance for 39 weeks, you must have paid Class 2 national insurance for at least 13 of the 66 weeks before your due date. If you have not paid enough Class 2 national insurance to get the full rate of £151.97 a week, you’ll get £27 a week for 39 weeks. You may be able to get the full rate by making early national insurance payments.
“Like our employed counterparts, self-employed women are eligible for maternity leave of up to 39 weeks and you may qualify for maternity allowance for the maximum of 39 weeks,” explains Trendall Morrison.
“You can also work in and on your self-employed business for up to 10 days within the maternity leave period, but if you work more than this, you will effectively end your rights to maternity allowance,” says Morrison.
Only employees can take paternity leave or pay and shared parental leave or pay. There is no equivalent to maternity allowance for self-employed fathers and partners who want to take time off.
It is also not currently possible for self-employed fathers and partners to take shared parental leave if the mother returns to work early and does not use all of her maternity leave, SMP or maternity allowance.
“Like employed mothers, you also have the right to return to work and end your maternity leave and eligibility for maternity allowance before the 39 weeks,” says Morrison. “This is a very personal choice that each woman should make on the merits and personal circumstances in their case.”
What other rights do you have as a pregnant, self-employed worker?
Self-employed parents do not have as many rights as employees but you may be protected against discrimination and be entitled to maternity allowance and other family benefits.
“Firstly, if you are eligible, and this is your first child, once your new arrival is here, ensure that you register for child benefit,” says Morrison. “The advantage to this is that once child benefit is in place, you will automatically be receiving national insurance credits, even if it takes you a while to build your business back up to be paying PAYE and national insurance at qualifying rates for the statutory pension on retirement.”
If on a low income, as a new freelancer or following the impact of Covid-19, you may be eligible for the SureStart maternity grant. This is a one-off payment to support first-time mothers, or mothers expecting multiple births.
“You may also want to speak with HMRC to determine eligibility for child tax credit, working tax credit, or alternatively universal credit as your earnings are likely, as a freelancer, to be impacted by time away from your business enjoying your new baby,” says Morrison.
“This can make a difference to eligibility for access to free childcare and support with childcare costs once your child is older, so should be explored as early as possible.”
On a practical level, it is also important to think about childcare. You may want to start considering how you will need to adapt your working patterns once you have your baby.
“How many hours do you want or need to work, and how will you plan? How will you recover your energy levels and avoid burn-out after pregnancy, and take care of your return to fitness so you can run your growing business effectively?” asks Morrison.
“Being well prepared, and understanding your rights, entitlements, support and options to protect your family can reassure you that you have done everything you can to give your new arrival the best start.”