How is Maternity Pay Calculated?

Understanding maternity pay can be confusing for both employers and employees.

We regularly help business owners and their employees get clear on what’s owed, when, and how to calculate it properly — especially in line with HMRC guidelines.

In this article, we’ll break down how Statutory Maternity Pay (SMP) is calculated in simple terms, who qualifies, what your obligations are as an employer, and how it reflects in your payroll and accounting.

What Is Statutory Maternity Pay?

Statutory Maternity Pay (SMP) is a legal entitlement paid to eligible employees who are on maternity leave. It helps replace lost income during the time they are away from work to have a baby.

Employers are responsible for paying SMP through the payroll system, but in most cases, they can reclaim 108.5% of it from HMRC — depending on their business size.

Who Qualifies for SMP?

To qualify for SMP, an employee must:

• Be an employee (not self-employed).

• Earn on average at least £125 per week during the 'qualifying period'.

• Have worked for the employer for at least 26 weeks by the end of the 15th week before the baby is due. Please note that this is the expected due date, not the actual date of birth.

• Provide the correct notice and proof of pregnancy (usually form MATB1).

When Does Maternity Pay Start?

SMP can start any time from the 11th week before the due date, or from the date the employee goes off work due to a pregnancy-related illness. It automatically begins if the baby arrives early.

How Much Is Statutory Maternity Pay?

SMP is paid for up to 39 weeks and is split into two parts:

1. First 6 weeks:

• Paid at 90% of the employee's average weekly earnings (AWE) — before tax.

2. Next 33 weeks:

• Paid at £184.03 per week (2025/26 rate) or 90% of AWE, whichever is lower.

How to Calculate SMP (Step-by-Step)

Let’s go through a basic example.

Emma earns £400 per week and qualifies for SMP.

1. First 6 weeks: 90% of £400 = £360 per week

2. Next 33 weeks: 90% of £400 = £360 — but £184.03 is lower, so she gets: £184.03 per week

Total SMP:

• 6 weeks x £360 = £2,160

• 33 weeks x £184.03 = £6,072.99

• Total SMP = £8,232.99

What Is the Qualifying Period?

To calculate average weekly earnings, you need to look at the 8-week period leading up to the qualifying week (15th week before the due date). This includes all earnings — wages, bonuses, and overtime.

Employer Accounting Treatment of SMP

From an accounting point of view, here's what to know:

• SMP is processed through payroll, like regular salary.
  

• Tax and national insurance will be deducted.
  

• SMP payments appear in monthly payroll journals under staff costs, but can be reclaimed via:

  • 92% for most employers.

  • 108.5% if your business qualifies as a Small Employer (National Insurance bill under £45,000).

Claiming Back SMP:

Use your payroll software or HMRC's Basic PAYE Tools to report and reclaim SMP through the Employer Payment Summary (EPS).

Common Questions Clients Ask Us

“Can we offer more than SMP?”

Yes. You can offer Enhanced Maternity Pay, but SMP is the legal minimum. If you pay more, the extra amount is your company’s expense and not reclaimable.

“How does maternity leave affect annual leave and pension?”

Employees still accrue holiday during maternity leave. You also need to maintain pension contributions during paid maternity leave.

“What if the employee resigns during maternity?”

If an employee leaves after receiving SMP, they’re still entitled to keep it.

Final Thoughts

Maternity pay may seem complex, but with the right guidance and payroll systems in place, it's manageable. The key is ensuring compliance with HMRC rules and maintaining accurate payroll records.

At Duo Accountants, we help businesses calculate, process, and reclaim SMP properly — reducing the admin burden and ensuring your business stays fully compliant.