Maternity pay

[Lewis]

dude69, Lewis,

In your case, did your spouse was the company secretary before claiming maternity allowance ? If so, did she mention it on the maternity allowance form MA1 ?

My spouse was in full time employment with a IT company before joing my ltd company as company secretary. And she is qualifying for SMP. However, since it takes a year to claim SMP compensation from HMRC, IMO it'd be best if she does not qualify for SMP and instead apply for Maternity Allowance.

If she resigns from the ltd company before the 15th week prior the baby is due, IMO, she will qualify for MA1. Is that correct ?

I'm looking for a way, so that she could continue being the company secretary and not qualify for SMP. So that she could claim MA1.

Please let me know if it id possible ? Thank you.

Regards,
imleo

Sorry to have only noticed this post 6 months later! But for the interest of others. I agree that it is probably better for the wife to leave the company employment (can still be a company secretary as this is just an office holder post not an employement one) at the right time (before 15th week, as above - not sure what exact week it is now). The main advantage I can see is that SMP coming in the Ltd company from HMRC has then got to come out via dividends so you lose 21% corp tax as least. Whereas Maternity Allowance just goes direct to the wife so no extra tax to pay. Plus there less company admin and you don't need to wait for money.

[slackbloke]

Just so that I can uderstand what that link means... the employer pays for the paternity leave.. and in the case of the contractor, it would be either their Ltd company or the Umbrella Company rather than the client?

Err yeah, if you are a contractor then the client cannot be your employer.

[pmeswani]

No it is not right. You are entitled to two weeks SPP. Details are here on directgov :

http://www.direct.gov.uk/en/MoneyTax...en/DG_10018750

Just so that I can uderstand what that link means... the employer pays for the paternity leave.. and in the case of the contractor, it would be either their Ltd company or the Umbrella Company rather than the client?

[slackbloke]

I've just been advised from my accountant that there is nothing I can claim for SPP - does that sound right? I'm waiting to hear back about SMP.

Thanks - PP

No it is not right. You are entitled to two weeks SPP. Details are here on directgov :

http://www.direct.gov.uk/en/MoneyTax...en/DG_10018750

[PorkPie]

I've just been advised from my accountant that there is nothing I can claim for SPP - does that sound right? I'm waiting to hear back about SMP.

Thanks - PP

[imleo]

dude69, Lewis,

In your case, did your spouse was the company secretary before claiming maternity allowance ? If so, did she mention it on the maternity allowance form MA1 ?

My spouse was in full time employment with a IT company before joing my ltd company as company secretary. And she is qualifying for SMP. However, since it takes a year to claim SMP compensation from HMRC, IMO it'd be best if she does not qualify for SMP and instead apply for Maternity Allowance.

If she resigns from the ltd company before the 15th week prior the baby is due, IMO, she will qualify for MA1. Is that correct ?

I'm looking for a way, so that she could continue being the company secretary and not qualify for SMP. So that she could claim MA1.

Please let me know if it id possible ? Thank you.

Regards,
imleo

[Lewis]

That is 100% correct. You can pay the voluntary Class 2 NICs for the qualifying period which I don't quite recall but is well under a year, and then she can get here £125.28/week for nine months. Quite a good sum of money really. The nice thing is that SMP is 90% of full salary which for her is only £5k/year, so the MA is actually higher.

Important thing is to check the qualifying period, as long as she's paying the NICs sufficiently long before you knock her up, then it counts.

Great. Thanks for the reply.

[dude69]

Did she pay Class 2 NIC? My wife is also registered self-employed but her businesss isn't yet in profit. From what I have read if she voluntarily pays the £2.20 per week Class 2 NIC, it will be assumed she has earnt £125.28 per week when calculating Maternity Allowance, which therefore maximises the Allowance. £2.20 per week for a year is only £114 which is well worth it to get the full allowance. Have I got that right?

That is 100% correct. You can pay the voluntary Class 2 NICs for the qualifying period which I don't quite recall but is well under a year, and then she can get here £125.28/week for nine months. Quite a good sum of money really. The nice thing is that SMP is 90% of full salary which for her is only £5k/year, so the MA is actually higher.

Important thing is to check the qualifying period, as long as she's paying the NICs sufficiently long before you knock her up, then it counts.

[Lewis]

The wife claimed Maternity Allowance through her self-employment as a child-minder instead.

Did she pay Class 2 NIC? My wife is also registered self-employed but her businesss isn't yet in profit. From what I have read if she voluntarily pays the £2.20 per week Class 2 NIC, it will be assumed she has earnt £125.28 per week when calculating Maternity Allowance, which therefore maximises the Allowance. £2.20 per week for a year is only £114 which is well worth it to get the full allowance. Have I got that right?

[dude69]

Dude69,

How did you decide to do ? I'm in the same situation.

Regards,
Leo

The wife claimed Maternity Allowance through her self-employment as a child-minder instead.

[imleo]

Dude69,

How did you decide to do ? I'm in the same situation.

Regards,
Leo

[Lewis]

Maternity Pay

That makes sense about not being an employee, as there is no employment contract, and if she wss employed she would legally have to have one, but nobody's suggested that spouses in PSCs get employment contracts, so even though she's paid a salary, it must be that it doesn't count as employment. I will try to establish that she isn't employed, and therefore has no right to SMP as it seems that Maternity Allowance is better than Statutory Maternity Pay for me.

It's £108.85/week, but tax-free, no NI, no income tax. So we get:

£108.85 * 39 = £4,245.15 from the government. Over the same period my company pays my wife 39 * £97 = £3,783

Total money earned by me: £3,783
NI/Corporation/Income Tax Paid: £0
Received: £8,028.15

With SMP, you'd get 90% of £97 (NI Upper Earnings Limit, which is what she's paid) for 32 weeks = £3,404.70, and nothing from the company.

Money earned by me: £3,783
Corporation Tax paid on money that would otherwise go out as a cost, as the wife isn't being paid a salary for 39 weeks: -£718.77
SMP received from Revenue and paid out: £3,404.70
Received: £6,468.93

The difference is £1559.22.

Dude69, this post is quite old but I can see you are still active on this forum. What was the outcome of your investigations? I am looking into SMP at the moment.

I found this "Your employer is someone who is liable to pay the employer’s share of your Class 1 NI contributions (or would do if you earned enough or were old enough to pay this). You do not have to have a written contract of service. And your employer does not actually have to have paid any NI contributions for you.” (http://www.dwp.gov.uk/advisers/ni17a/smp/smp_2.asp)

which makes me think a company secretary/wife paid £5K per year is eligible for SMP.

Cheers Lewis

[dude69]

That makes sense about not being an employee, as there is no employment contract, and if she wss employed she would legally have to have one, but nobody's suggested that spouses in PSCs get employment contracts, so even though she's paid a salary, it must be that it doesn't count as employment. I will try to establish that she isn't employed, and therefore has no right to SMP as it seems that Maternity Allowance is better than Statutory Maternity Pay for me.

It's £108.85/week, but tax-free, no NI, no income tax. So we get:

£108.85 * 39 = £4,245.15 from the government. Over the same period my company pays my wife 39 * £97 = £3,783

Total money earned by me: £3,783
NI/Corporation/Income Tax Paid: £0
Received: £8,028.15

With SMP, you'd get 90% of £97 (NI Upper Earnings Limit, which is what she's paid) for 32 weeks = £3,404.70, and nothing from the company.

Money earned by me: £3,783
Corporation Tax paid on money that would otherwise go out as a cost, as the wife isn't being paid a salary for 39 weeks: -£718.77
SMP received from Revenue and paid out: £3,404.70
Received: £6,468.93

The difference is £1559.22.

[Mustang]

Contract of employment

Seek professional advice but, in my opinion, it would depend whether YourCo had a contract of employment with your wife. If it does, what's in it would determine what maternity pay and if it doesn't I would say you cant get SMP. You as a director can claim SPP.

In my case I am sole director and Mrs Mustang is Co Secretary. I claimed SPP.

HTH

[dude69]

Anyone running a PSC and paying the wife the annual £5k for services performed paid her Statutory Maternity Pay (SMP)?

It seems quite generous - up to 39 weeks pay - 6 weeks at 90% of salary (with no limit), then the remaining weeks at 90% of salary (with a £108.85/week limit)

http://www.dwp.gov.uk/advisers/ni17a/smp/smp_11.asp

The money comes from the government, which is handy.

She earns about £100/week, so would get less than the £90/week, seems like there's nothing to stop me giving her a payrise - would pay more tax & NI now, but would get it back in SMP later. Not sure I'd risk this though.

I can get Statutory Paternity Pay, as well, but it's not nearly as good: 90% of salary (max £108.85) for 1/2 weeks.

Of course the arrangement with the Missus is all legal pending Arctic Systems decision, but she doesn't really work for a living, so the stuff from the DWP about only being paid till she goes back to work is a bit confusing if you never worked in the first place. What is the wife's salary deemed to be for?

Other thing is she's self-employed and paying class 2 NI, so she can actually get full Maternity Allowance of £108.85/week from the Jobcentre, which would probably be better, but you only get MA if you can't get SPP, so ironically it would probaby be easier for me if she's NOT eligible for the SMP, so you can get MA instead, which keeps the PSC out of things, and also the money's paid as a benefit rather than from withholding PAYE (of course we don't pay enough to cover the SMP).

Anyone had any experience with this?

I would call the DWP, but I'm not sure how to put the 'The company I am director of pays my wife £5k/year to do very little" bit.