Hey everyone!
So, stating the obvious… a lot has happened in the last couple of years! Covid-19 pandemic, purchasing my first house and now…. preparing to have a baby!
“Back-up, rewind” I hear you say… yes, you heard correctly; motherhood awaits me!
As our impending bundle of joy (and maybe mischief) is due near the end of Summer, I thought it prudent to create an article on preparing finances for maternity leave.
Quick Summary of Maternity Leave and Pay in the UK
- An employee is entitled to up to 52 weeks’ off maternity leave (comprising 26 weeks’ ordinary maternity leave (“OML”) and 26 weeks’ additional maternity leave (“AML”)) regardless of their length of continuous service at such employment;
- Subject to eligibility (including continuous service of at least 26 weeks by the 15th week prior to the expected week of childbirth), the right to receive statutory maternity pay (“SMP”) for up to 39 weeks of maternity leave (see below for current 2022/23 rate);
- If an employee, you have the right to return to the same job (if only OML is taken) or a suitable alternative role if the same job is not available (if both OML and AML taken) when you return to work; and
- Right to be given priority for any suitable alternative vacancies where a redundancy procedure is effected during maternity leave
What is SMP?
SMP is a set rate of monies paid whilst you are off on maternity leave for up to 39 weeks of your maternity leave. The current 2022/2023 rates are as follows;
| Period | Rate |
| First 6 weeks of maternity leave (per week) | 90% of employee’s average weekly earnings (before tax) |
| Remainder 33 weeks (per week) | £156.66 OR 90% of employee’s average weekly earnings (whichever is lower) |
The above figures are the gross weekly amounts prior to tax and NI deductions being taken (yes, you heard right… you may still be taxed on the SMP payment before that sweet coin hits your account).
Company Maternity Pay or “Enhanced” Maternity Pay (same, same…)
If you are an employee, your employer may have a company maternity pay scheme which will pay out more than the government statutory rates. Please note that any enhanced pay under such a scheme is likely to include your SMP entitlement for the weeks covered.
If you haven’t already, it’s worth checking whether your company operates any enhanced maternity pay scheme and familiarising yourself with its eligibility criteria. A company can set its own rules for payment under such scheme (such as length of continuous service before becoming eligible) so long as such criteria is not inherently discriminatory.
What if you are not eligible for SMP?
If you do not meet the eligibility criteria for SMP, then you may wish to consider whether you can make an application for Maternity Allowance (“MA”). MA can be paid for a similar 39 week period of maternity leave.
Nursery fees
Ok, I won’t lie… nursery fees are expensive! End of. Period.
If you are lucky enough to have friends or family that are able to assist in looking after your precious one when you return to work then kudos to you; definitely take them up on the offer!
If not, then you may wish to check out whether you are eligible for the government tax-free childcare account which can provide you with up to £2,000 per year (or up to £4,000 per year if your child is disabled) to assist with the costs of approved childcare. The account works on the premise that for every £8 you pay in, the government will pay in £2. Your childcare costs are then paid out of this account directly to your approved childcare provider.
Please note that you should consider this option carefully to conclude whether it is right for you as you cannot get the tax-free childcare at the same time as claiming certain other state benefits e.g, universal credit, working tax credits etc.
Top tip is to start looking at nurseries and the prices whilst you are pregnant as places for nurseries fill up very quickly!
Is there any other government help?
You may wish to check out other state assistance which may be provided (such as Universal Credit, Child and/or Working Tax Credit, Child Benefit) in addition to any grants for which you may be eligible. For example, if you are already in receipt of certain state benefits then you may be eligible for the one-off Sure Start grant of £500 and/or assistance under the NHS Healthy Start Scheme (which can potentially be claimed from the 10th week of pregnancy) to help with the cost of healthy food, milk and vitamins.
To Buy or Not to Buy… that is the question!
Although it can be tempting to go out and spend your hard earned cash on everything baby, I have refrained from doing so; instead, I have been scouring sites such as Facebook Marketplace for any nursery furniture that I can grab at a steal, in addition to limiting my purchases of baby clothing to a few items in varying sizes.
I am intending to buy the cot mattress and any bedding new but will be keeping costs to a minimum in respect of this.
In summary, it can be daunting thinking of the salary drop whilst on maternity leave but knowing your bills still need to be covered (especially in light of the energy cap rises). I will monitor my expenditure throughout my maternity leave in order to stay on track with finances and to provide any further tips for this exciting phase!
Summary of Top Tips (so far)…
- Don’t go crazy buying all new things for baby; review sites such as Gumtree, eBay, Facebook Marketplace to pick up nearly new/good condition items for less.
- Review your employer’s maternity leave and pay policy – it may be that your company offers enhanced payments (subject to eligibility). If you are not eligible, there is no harm in asking for it anyways!
- Become savvy on any government assistance and/or grants that you can take advantage of as an impending/new parent.
- Visit nurseries early in order to give yourself the best possible chance of securing your child’s place at the time you want and so that you are clued-up as to the costs at the earliest opportunity.
- If you are having a baby shower and/or other party thrown for you prior to birth, if you feel comfortable doing so, make a wish list of items you need. This will save your friends and family the hassle of thinking of a present, reduce the risk of duplicate items and ensure you have a head start on obtaining items you need without you buying them yourself!
Saver Raver 