What Is Statutory Maternity Pay?
Statutory Maternity Pay, usually shortened to SMP, is the legal minimum an employer must pay an employee who takes maternity leave. Like sick pay, it is paid by the employer through the normal payroll run, with tax and National Insurance deducted in the usual way.
For 2026/27 it runs for 39 weeks and comes in two parts:
- Weeks 1 to 6: 90 percent of average weekly earnings, with no cap at all
- Weeks 7 to 39: £194.32, or 90 percent of average weekly earnings, whichever is lower
The £194.32 figure is up from £187.18 in 2025/26. It is the same rate used for statutory paternity, adoption, shared parental, parental bereavement and neonatal care pay, so if you get one right you have got all six right.
Unlike sick pay, employers get most or all of this money back from HMRC. That is the part of SMP that gets almost no attention, and it is where the interesting decisions are.
How Much Is Statutory Maternity Pay? The £215.91 Line
The two-part structure confuses people because it is never clear which half of the "whichever is lower" test applies to them. Here is the number that settles it.
£194.32 divided by 0.9 is £215.91.
So:
- Average weekly earnings of £215.91 or more, and 90 percent of your pay is above the flat rate. You get 90 percent for six weeks, then £194.32 for 33 weeks.
- Average weekly earnings below £215.91, and 90 percent of your pay is below the flat rate. You get 90 percent of your pay for the whole 39 weeks. The flat rate never comes into it.
£215.91 a week is about £11,227 a year. Most full time employees are above it. A lot of part time employees are not, and for them SMP is simply nine tenths of their normal pay for the best part of a year, which is a far better deal than the headline rate suggests.
Three worked examples, all on 2026/27 figures:
| Annual salary | Average weekly earnings | Weeks 1 to 6 | Weeks 7 to 39 | Total SMP |
|---|---|---|---|---|
| £9,360 (16 hrs at £11.25) | £180.00 | £162.00 | £162.00 | £6,318.00 |
| £24,000 | £461.54 | £415.38 | £194.32 | £8,904.87 |
| £35,000 | £673.08 | £605.77 | £194.32 | £10,047.18 |
Notice what happens between the first row and the third. The employee earning nearly four times as much receives less than 60 percent more SMP. Above £215.91 a week, every extra pound of salary buys you nothing in weeks 7 to 39. All of the variation sits in the first six weeks.
If you want the monthly figure, the flat rate works out at £842.05 a month (£194.32 multiplied by 52, divided by 12). Payroll software does this automatically, but people budgeting for maternity leave rarely do, and multiplying by four instead of 4.33 understates it by about £65 a month.
Who Qualifies for Statutory Maternity Pay?
There are two separate entitlements here, and they have completely different tests. This is the single most common misunderstanding we see.
Statutory Maternity Leave is a day one right. No minimum service, no minimum hours, no minimum earnings. If someone is an employee and gives the correct notice, they get up to 52 weeks of leave from their first day in the job.
Statutory Maternity Pay is not. To qualify, an employee must:
- Have worked for you continuously for at least 26 weeks ending with the qualifying week, which is the 15th week before the week the baby is due
- Have average weekly earnings of at least £129 in the eight weeks ending with the qualifying week, which is the Lower Earnings Limit for 2026/27
- Give at least 28 days notice of when they want SMP to start
- Provide proof of pregnancy, normally a MATB1 certificate from a doctor or midwife, no more than 21 days after SMP is due to start
So it is entirely possible, and quite common, for an employee to be legally entitled to a year off and legally entitled to nothing at all from you while they take it. Somebody who joined in month three of a pregnancy is in exactly that position.
If an employee does not qualify, you must give them form SMP1 within seven days of deciding, explaining why. That is not optional and it is not a courtesy. The employee needs it to claim Maternity Allowance from the DWP instead, and delaying it delays their money.
The Threshold That Sick Pay Just Abolished
Here is something nobody appears to have noticed, and it happened four months ago.
On 6 April 2026, the Employment Rights Act 2025 removed the Lower Earnings Limit condition from Statutory Sick Pay entirely. Every employee now qualifies for sick pay whatever they earn, at 80 percent of average weekly earnings if that is less than the flat rate.
Statutory Maternity Pay kept its Lower Earnings Limit. It is still £129 a week.
Consider an employee earning £100 a week. As of April 2026 she is entitled to Statutory Sick Pay from her employer, from day one, at £80 a week. If she becomes pregnant, she is entitled to no maternity pay from that same employer at all, because £100 is below £129. She has to apply to the DWP for Maternity Allowance instead, and wait.
Two statutory payments. Same government, same employer, same payslip, same tax year. One has just decided that a minimum earnings threshold is unfair and abolished it. The other has kept it and uprated it.
We are not arguing that SMP should have been changed at the same time. There is a coherent case for the threshold, which is that SMP costs the employer money up front and the recovery mechanism has to be administered. But whatever the argument is, it cannot be the argument the government made about sick pay four months ago, because that argument was that excluding the lowest paid from a statutory payment was wrong in principle. Someone should probably say out loud which of the two positions is the real one.
Maternity Pay Is Not Maternity Leave
Statutory Maternity Leave is 52 weeks, made up of 26 weeks Ordinary Maternity Leave and 26 weeks Additional Maternity Leave.
Statutory Maternity Pay is 39 weeks.
The gap is 13 weeks, and it is unpaid. An employee who takes the full year off gets nothing at all for the last three months of it. This surprises people constantly, usually around month nine, and it is entirely predictable in advance.
A few more mechanics worth knowing:
- The earliest leave can start is 11 weeks before the expected week of childbirth. Most people start closer to the due date to keep more paid weeks for after the birth.
- Leave starts automatically if the employee is off with a pregnancy related illness in the four weeks before the week the baby is due, whatever they had planned. The same applies the day the baby arrives if that comes first.
- Two weeks after the birth are compulsory, four for factory workers. This is one of the very few things in employment law an employee cannot waive.
- Ten keeping in touch days are available. They are optional on both sides, they do not end the maternity leave period, and the pay for them is a matter for agreement rather than statute.
Annual leave keeps accruing throughout the whole 52 weeks, including the unpaid 13. For an employee with generous contractual holiday, that is a meaningful sum sitting on the balance sheet at the point they come back.
Working Out Average Weekly Earnings
This is where the errors are, and they are expensive because they repeat for 39 consecutive weeks.
Average weekly earnings are calculated over the relevant period: roughly the eight weeks ending with the qualifying week, or more precisely the period between the last normal payday on or before the end of the qualifying week and the last normal payday at least eight weeks earlier. For monthly paid staff, that means the two monthly payslips before the qualifying week.
Two things follow that are not obvious.
First, the measurement window is early. The qualifying week is 15 weeks before the due date, which is around week 25 of a pregnancy. The eight weeks before that put you somewhere around weeks 17 to 25. Whatever was happening to that employee's pay in the spring decides their income for the following winter. A bonus paid in that window inflates SMP for 39 weeks. A period of reduced hours in that window suppresses it for 39 weeks. Most people have no idea the window even exists until it has closed.
Second, a later pay rise reaches backwards. This is the Alabaster rule, which comes from a 2004 European Court of Justice ruling in a case brought against Woolwich Building Society. If an employee gets a pay rise at any point between the start of the relevant period and the end of her maternity leave, average weekly earnings must be recalculated as if the rise had always applied, and any resulting SMP arrears paid.
It matters more than it sounds. A rise awarded in month eight of maternity leave still requires you to go back and recalculate the first six weeks, which were paid at 90 percent of earnings with no cap. On a decent salary and a decent rise, that is real money.
The rule catches employers who never think of themselves as awarding pay rises. If you have staff on or near the National Living Wage, the April uprating is a pay rise for Alabaster purposes. Every April, every employer with minimum wage staff on maternity leave has recalculations to do, and in our experience most of them do not do them.
What SMP Actually Costs an Employer
Now the part that gets left out of almost every guide on the subject.
Employers do not bear the cost of Statutory Maternity Pay. They recover it from HMRC by offsetting it against the PAYE and National Insurance they would otherwise hand over, claimed through the Employer Payment Summary each month.
There are two rates:
| Recovery rate | Who gets it | |
|---|---|---|
| Standard | 92% | Total Class 1 NICs above £45,000 in the previous tax year |
| Small Employers' Relief | 109% | Total Class 1 NICs of £45,000 or less in the previous tax year |
Read the second row again. A qualifying small employer recovers more than it paid out. The extra 9 percent is compensation for the employer National Insurance due on the SMP itself and for the administration. It went from 3 percent to 8.5 percent in April 2025 and to 9 percent in April 2026, and it is one of the very few places in UK payroll where the arithmetic runs in the employer's favour.
On our £35,000 example, total SMP of £10,047.18 becomes:
- At 109 percent: £10,951.43 recovered, a surplus of £904.25
- At 92 percent: £9,243.41 recovered, a shortfall of £803.77
The gap between the two outcomes is £1,708 on a single maternity leave. On the same employee, doing the same job, at the same salary.
Two practical notes. The recovery is an offset against your PAYE bill, so it is not cash unless you have a PAYE bill big enough to absorb it. If you do not, you can apply to HMRC for advance funding before you pay, which small employers with one large claim and a small payroll should do rather than finding out in month two that the money is stuck. And the £45,000 test is measured on your gross Class 1 National Insurance for the previous tax year, before any Employment Allowance is deducted. Employment Allowance and Small Employers' Relief are separate schemes and claiming one does not affect the other.
The £45,000 Problem Nobody Flagged
Here is the finding that surprised us most when we ran the numbers.
The Small Employers' Relief threshold has been £45,000 since 2013/14. It has never been uprated, not for inflation, not for wage growth, not for anything.
Meanwhile, from April 2025, employer National Insurance went from 13.8 percent to 15 percent, and the secondary threshold at which it starts was cut from £9,100 to £5,000. Everyone modelled what that did to their wage bill. Almost nobody modelled what it did to the £45,000 test, because the test sits in a completely different part of payroll and nothing about it appeared to change.
Take a business with ten employees on £30,000 each.
Under the old rules: employer NI of £2,884.20 each and employee NI of £1,394.40 each, giving total Class 1 NICs of £42,786. Under the threshold. Small Employers' Relief applies.
Under 2026/27 rules: employer NI of £3,750 each and employee NI of £1,394.40 each, giving total Class 1 NICs of £51,444. Over the threshold. Recovery drops to 92 percent.
Same ten people. Same salaries. Nobody hired, nobody got a rise. The business has simply moved from recovering 109 percent of statutory parental pay to recovering 92 percent, and will find out the next time somebody announces a pregnancy.
Roughly, the point at which a business on £30,000 salaries loses the relief has moved from about eleven employees to about nine. That is not a small shift, and because the threshold is tested on the previous tax year, a business that crossed it in 2025/26 lost the relief for the whole of 2026/27 before anyone had a chance to look.
If She Does Not Qualify: Maternity Allowance
An employee who fails the 26 week service test or the £129 earnings test claims Maternity Allowance from the DWP instead, using the SMP1 you issued.
Maternity Allowance is also £194.32 a week for 39 weeks, or 90 percent of average weekly earnings if that is lower, on broadly the same shape as SMP. The qualifying route is different: employed or self employed for at least 26 of the 66 weeks before the due date, earning at least £30 a week in any 13 of them.
The self employed route runs on Class 2 National Insurance. Thirteen weeks of Class 2 contributions paid or treated as paid in the test period gets the full £194.32. Fewer than that and the DWP pays a reduced rate, down to a floor of £27 a week.
This is a genuinely important planning point for anyone trading as a sole trader who is thinking about a family. Class 2 National Insurance stopped being compulsory for most self employed people from April 2024, but voluntary Class 2 contributions still buy the full rate of Maternity Allowance, along with the State Pension qualifying year. Stopping them to save a few pounds a week can cost roughly £6,500 across a maternity claim.
Directors and Owner Managed Companies
Two things to know if you run your own limited company, and the second one is worth real money.
A £5,000 salary produces no maternity pay. A director paying themselves at the secondary threshold earns £96.15 a week, below the £129 Lower Earnings Limit, so there is no SMP. Dividends do not help, because dividends are not earnings and do not count towards average weekly earnings at all. This is now the only one of the two main statutory payments that excludes them, since sick pay dropped its threshold in April.
A £12,570 salary produces a surplus. A director on the full personal allowance earns £241.73 a week, comfortably above the £215.91 line. That is £217.56 for six weeks and £194.32 for 33, total SMP of £7,717.91. If the company qualifies for Small Employers' Relief, which most single director companies comfortably do, it recovers 109 percent, or £8,412.52. The company is roughly £695 better off than if the director had never taken maternity leave, and the director has taken home £7,717.91 of salary while not working.
There is one trap that ruins this, and we see it every year. Average weekly earnings for SMP are based on earnings actually paid in the eight week relevant period. A director who pays themselves a single annual lump sum, which plenty do because it is administratively easier, may have precisely nothing in that eight week window, and therefore no SMP at all, despite a perfectly adequate annual salary. Run it monthly through RTI. This is one of several reasons why we do, and it links directly to how you structure directors' remuneration for the year.
Two caveats before anyone gets carried away. The salary has to be genuine, paid, and reported in real time. And this is not something you can arrange retrospectively once a due date is known, because the relevant period is fixed at 15 weeks before the birth.
What Employers Should Do
Check which side of £45,000 you are on. Look at your 2025/26 total Class 1 National Insurance, employer and employee, before Employment Allowance. If it is close to £45,000, it now decides a four figure sum on every parental leave you handle, and the April 2025 changes may have moved you without you noticing.
Diarise the qualifying week, not the due date. Everything is measured from 15 weeks before the birth. By the time somebody hands you a MATB1, the eight week earnings window has usually already closed.
Build the Alabaster check into your April payroll routine. Any pay rise, including the National Living Wage uprating, triggers a recalculation for anyone whose maternity leave overlaps it. Make it a standing item rather than something you remember.
Issue SMP1 within seven days when someone does not qualify. It is a legal requirement and it is the document that starts their Maternity Allowance claim.
Apply for advance funding if the claim is large relative to your PAYE bill. Recovery is an offset, not a payment. A small employer with one senior employee on maternity leave can easily have more SMP to recover than PAYE to offset it against.
Say plainly what happens after week 39. Thirteen weeks of unpaid leave is a difficult conversation to have in month nine and an easy one to have in month two.
Our View
The recovery mechanism is the best kept secret in UK payroll, and that is a policy failure. Small Employers' Relief pays back 109 percent of what you hand over. Every survey of small business attitudes to maternity leave finds employers describing it as a cost they absorb, which for the majority of them is simply not true. Some of that is on employers for not asking. Most of it is on a system that buried a genuinely generous provision three clicks into an HMRC manual and never told anyone it existed. If you want small firms to be relaxed about hiring people who might have children, telling them the money comes back would be a reasonable place to start.
The frozen threshold is fiscal drag by another name, and it is the mean sort. £45,000 has not moved since 2013/14. Wages have risen by well over a third since then, and April 2025 pushed employer National Insurance up on top of that. The effect is that a business qualifies for less support the more people it employs and the better it pays them, at exactly the point where it is most likely to have someone go on maternity leave. Nobody voted for this. It happened because a number in a manual was left alone for thirteen years. Index it to the secondary threshold and the problem disappears permanently.
Six weeks at 90 percent is the wrong shape for how families actually run. SMP is front loaded: uncapped for six weeks, then flat for thirty three. So the money is at its most generous during the fortnight the employee is legally required to be off and the four after it, and at its thinnest around months six to nine when childcare decisions get made and the return to work is being weighed up. If the policy goal is keeping mothers attached to the labour market, the money is in the wrong place. We would rather see the same total spread more evenly, or weighted slightly towards the end.
The £129 threshold should go, and everyone knows it. Sick pay lost its Lower Earnings Limit in April on the argument that excluding the lowest paid from a statutory payment cannot be justified. That argument does not become weaker when applied to maternity. The counterargument, that SMP costs employers money whereas sick pay recovery was abolished in 2014, actually runs the wrong way: because SMP is recoverable at 92 or 109 percent, extending it downwards would cost employers close to nothing and cost the Exchequer a fairly modest amount. The people excluded are on under £6,708 a year. There are not many of them and they are the ones who need it most.
Most of the money in a maternity leave is not the maternity pay. It is the cover. Recruiting, training and running a fixed term contract for nine months is a far larger number than the 8 percent of SMP a non qualifying employer fails to recover, and it is the one no scheme reimburses. Employers who plan for it early, and who treat the returner as somebody worth keeping rather than a scheduling problem, come out of it much better than employers who improvise from month seven.
How IAK Can Help
Statutory maternity pay is not difficult, but it has four separate places to get it wrong, and each of them is invisible for months. The relevant period closes before anyone thinks about it. A pay rise triggers a recalculation nobody runs. The recovery rate turns on a threshold nobody checks. And a director's salary structure quietly decides whether the entitlement exists at all.
Our payroll service handles all of it: average weekly earnings on the correct relevant period, the 90 percent comparison applied properly, Alabaster recalculations when pay changes, SMP1 issued on time when someone does not qualify, and recovery claimed through the EPS at the right rate, including checking each year which side of the £45,000 line you are on.
For owner managed companies we build statutory payments into the annual salary and dividend decision rather than leaving them to chance, because a salary set at £5,000 and a salary set at £12,570 produce completely different answers when somebody needs to take time off, and by the time that matters it is far too late to change it.
If you are an employer with a maternity leave coming up and you are not sure what you can recover, or you run payroll in house and have never claimed Small Employers' Relief, contact us for a free consultation. You may also find our guides to statutory sick pay, PAYE, National Insurance, directors' remuneration, salary sacrifice and tax codes useful, along with our salary calculator.
Sources
- Maternity pay and leave: pay, GOV.UK, on the 39 week period, the 90 percent of average weekly earnings first six weeks, the £194.32 rate for the remaining 33 weeks and the automatic start on pregnancy related absence.
- Rates and thresholds for employers 2026 to 2027, GOV.UK, on the £194.32 weekly rate applying to SMP, SPP, SAP, ShPP, SPBP and SNCP, the £129 Lower Earnings Limit, and the 92 percent and 109 percent recovery rates either side of the £45,000 Class 1 NICs threshold.
- Maternity pay and leave: eligibility, GOV.UK, on the 26 weeks continuous employment requirement, the qualifying week, the earnings condition, and the requirement to issue form SMP1 within seven days.
- Statutory Maternity Pay and Leave: employer guide, GOV.UK, on the 52 weeks of leave split into Ordinary and Additional Maternity Leave, the 11 week earliest start, compulsory maternity leave and employer recovery.
- SPM182100: Small Employer's Relief annual threshold, HMRC Statutory Payments Manual, on the £45,000 threshold being measured on gross Class 1 National Insurance for the previous tax year before Employment Allowance.
- Small Employers' Relief: compensation rate increased to 109%, CIPP, on the compensation rate rising to 9 percent from April 2026.
- Eligibility for pay, Statutory maternity leave and pay, Acas, on the distinction between the day one right to maternity leave and the service and earnings conditions attached to maternity pay.
- Maternity Allowance, GOV.UK, on the 66 week test period, the 26 of 66 weeks employment condition, the £30 a week earnings condition and the Class 2 National Insurance route for the self employed.
- The Alabaster ruling, Alabaster v Woolwich plc and Secretary of State for Social Security, implemented in UK law by the Statutory Maternity Pay (General) (Amendment) Regulations 2005, on recalculating average weekly earnings following a pay rise awarded between the start of the relevant period and the end of maternity leave.