Limited Company - can I pay secretary SMP and pay som else maternity cover?

[Jessica@WhiteFieldTax]

MA has the benefit over SMP of beng tax and NI free as well, and you get NI credits

[formant]

And remember if you don't qualify for SMP you'll get Maternity Allowance which you need to apply for via the DSS.

Maternity Allowance (MA) - DWP

Well, if you qualify.

You'll need to have worked for a minimum 26 weeks in the 60 weeks leading up the the baby's due date (they will request 13 weeks of consecutive payslips), and you will need to have earned a salary at or above the lower earnings limit. Due to the more lax rules, you will be able to ensure you qualify for Maternity Allowance after you've become pregnant. Maternity Allowance is paid by the DWP rather than your partner's company.

As this strikes me as the typical tax/NI avoidance scenario of wife/partner drawing a salary for next to no real work done (no offence, but that's usually how it is), I would probably say it makes more sense to deliberately avoid being eligible for SMP, so that you can claim MA instead. All you need to do for that is to terminate your employment at your husband's ltd company prior to the 'qualifying week' (15th week before childbirth). Prior to this you may want to ensure that for some time your salary exceeds £135+10% a week, so that you'd be eligible to receive the maximum amount of Maternity Allowance.

Happy to advise on the logistics of claiming MA, as I've just been through all that (only started contracting in November and baby is due within the next three weeks, so I was obviously not eligible for SMP).

[northernladuk]

Thank you so much Martin and Just1morethan - very clear info there for me to think about. Not happy with my husbands accountant-who always has to "get back to him" with a response and never does!

Being relatively new to contracting, we are really learning as we go. So all advice massively appreciated-thank you

Time for a new accountant then. This is the person that deals with all your finances that you have to sign for and are responsible for. If you don't trust them or they are not giving you a reasonable service then switch.

[sbmcb]

Thank you so much Martin and Just1morethan - very clear info there for me to think about. Not happy with my husbands accountant-who always has to "get back to him" with a response and never does!

Being relatively new to contracting, we are really learning as we go. So all advice massively appreciated-thank you

[Alan @ BroomeAffinity]

And remember if you don't qualify for SMP you'll get Maternity Allowance which you need to apply for via the DSS.

Maternity Allowance (MA) - DWP

[Martin at NixonWilliams]

Hi, this is my first post. Just sussing out options really... my husband has a limited company. He's director and I'm his secretary. He's only been self employed 1 year having been an employee before that. We're planning another baby and I know he can pay me SMP (statutory maternity pay) for 39 weeks. We were just wondering if during that time, he can employ a secretary (his mother, perhaps) as a maternity cover? Could she be receiving a salary in addition to my SMP?

A separate question...if I am receiving SMP, can I still receive dividends? I would still be a shareholder and technically still employed?

Thank you for any advice

Hi sbmcb,

Firstly, you must consider whether you are eligible for SMP. You must have been employed by your employer for a continuous period of at least 26 weeks into the qualifying week (which is the 15th week before the week in which the baby is due). You must also have earnings at or above the lower earnings threshold (£107 per week for 2012/13).

It is possible to appoint somebody in a temporary role during your absence. However, the question to be asked is whether the salary can be justified from a commercial point of view. In my experience, I have seen many secretaries of small one man companies being paid circa £7k (generally in line with the tax or NI threshold) for duties that probably take no more than a couple of hours per month. This would be extremely difficult to justify to HMRC if asked. The same question should then be asked of your mother in law should she take up the role in your absence.

In response to our question on dividends, your employment status within the company does not make a difference to your rights as a shareholder in the company.

I hope this helps.

Martin

[northernladuk]

If I found my secretary was working with free forums to run my business rather than speaking to accountants I would sack her. HTH

Employing his mother sounds decidedly dodgy to me.

[LisaContractorUmbrella]

Hi, this is my first post. Just sussing out options really... my husband has a limited company. He's director and I'm his secretary. He's only been self employed 1 year having been an employee before that. We're planning another baby and I know he can pay me SMP (statutory maternity pay) for 39 weeks. We were just wondering if during that time, he can employ a secretary (his mother, perhaps) as a maternity cover? Could she be receiving a salary in addition to my SMP?

A separate question...if I am receiving SMP, can I still receive dividends? I would still be a shareholder and technically still employed?

Thank you for any advice

Are you actually working for your husband and fulfilling the role of a secretary for him or are you just a secretary in name? If you do actually work for him and he pays you a salary then the SMP rules apply just as well to you as any other employee and there is no reason why your husband shouldn't have a replacement for you on contract whilst you are on mat leave.

[sbmcb]

Hi, this is my first post. Just sussing out options really... my husband has a limited company. He's director and I'm his secretary. He's only been self employed 1 year having been an employee before that. We're planning another baby and I know he can pay me SMP (statutory maternity pay) for 39 weeks. We were just wondering if during that time, he can employ a secretary (his mother, perhaps) as a maternity cover? Could she be receiving a salary in addition to my SMP?

A separate question...if I am receiving SMP, can I still receive dividends? I would still be a shareholder and technically still employed?

Thank you for any advice