Maternity pay in the United Kingdom: how employers handle it
Reviewed by Mellow Editorial Team, HR & payroll content team
Statutory Maternity Pay (SMP) is paid by the employer but largely funded by HMRC through National Insurance rebates. The employer's net cost is usually small — and for most small businesses, zero or below.
Who qualifies for SMP
An employee qualifies for SMP if she has worked for you continuously for at least 26 weeks by the end of the 15th week before her expected week of childbirth (the "qualifying week"), earns at least the Lower Earnings Limit for National Insurance purposes in the relevant period, and gives you the correct notice with medical evidence (usually a MATB1 certificate from her midwife or GP).
If she does not meet those conditions, she may still be entitled to Maternity Allowance paid directly by the DWP — that is not your liability.
How much SMP you must pay
SMP runs for up to 39 weeks:
- First six weeks: 90% of the employee's average weekly earnings (AWE), with no upper cap.
- Remaining 33 weeks: the lower of 90% of AWE or the flat weekly SMP rate set by the government each April.
You must calculate AWE from the employee's gross pay in the eight weeks (or two months, for monthly-paid staff) before the qualifying week. Bonuses and irregular pay that fall in that window count toward AWE.
The remaining 13 weeks of maternity leave (weeks 40–52) are unpaid unless your contract offers enhanced pay.
The employer's actual cost
This is where many employers are surprised. You pay SMP out of your own payroll first, then recover most or all of it from HMRC.
Standard employers (those who paid more than £45,000 in employer National Insurance in the previous tax year) can recover 92% of SMP paid.
Small employers who paid £45,000 or less in employer NI qualify for Small Employers' Relief (SER). They recover 100% of SMP plus an additional 3% compensation for the NI you would have paid on that SMP amount. In practice, a small employer recoups more than they paid out.
Recovery happens through your payroll software: you simply reduce the amount you send to HMRC each month via PAYE by the SMP you have already paid employees. You do not need to claim separately — it is offset directly through RTI.
Running SMP through payroll correctly
SMP is treated as earnings, which means it goes through your normal payroll process. You deduct income tax and employee National Insurance from SMP payments in the usual way. Employer NI is not due on SMP — that is one reason the net cost stays low.
The steps in practice:
1. Confirm eligibility when the employee notifies you. You have 28 days to respond with an SMP1 form if she does not qualify, or written confirmation of her SMP start date if she does.
2. Calculate AWE from the correct eight-week or two-month reference period.
3. Set up SMP in your payroll software with the correct start date and payment amounts for each phase.
4. Report through RTI — every SMP payment appears on the Full Payment Submission (FPS) you send to HMRC on or before each payday, as normal.
5. Offset recovery on your Employer Payment Summary (EPS), which tells HMRC how much SMP you are reclaiming against your PAYE liability that month.
6. Keep records for at least three years — HMRC can audit your SMP calculations.
If your monthly SMP recovery exceeds your PAYE liability, HMRC will pay the difference directly to you.
Contractual enhanced maternity pay
You are free to offer more than SMP — many employers do to attract and retain staff. Enhanced pay might top up SMP to full salary for a set period, or extend paid leave beyond 39 weeks. Whatever you offer, the enhanced element above statutory SMP is a normal payroll cost; you cannot recover it through the NI offset scheme.
If you offer enhanced pay, make sure it is written clearly into contracts or a standalone maternity policy. The Employment Rights Act 2025 reinforces day-one rights for employees, and having an unambiguous written policy reduces the risk of disputes about entitlement.
What happens to the employment contract
An employee on maternity leave retains all contractual benefits except pay. Pension contributions continue during SMP: you pay your auto-enrolment minimum of 3% of qualifying earnings, and the employee's 5% contribution is calculated on the SMP she actually receives, not her normal salary — unless your scheme rules are more generous. Annual leave (at least 5.6 weeks for a full-time employee) continues to accrue throughout the full 52 weeks of maternity leave and can be taken before or after the leave period.
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