Statutory Maternity Pay (SMP) and Statutory Paternity Pay (SPP) are both taxable earnings — income tax and National Insurance are deducted through PAYE just like your normal salary. However, because the amounts are significantly lower than most salaries, the cumulative PAYE system often means you pay little or no tax during the leave period. This guide explains how the tax works, what enhanced employer schemes mean for your tax position, and how to budget for the income reduction in 26-27.[1]
How much is Statutory Maternity Pay?
SMP is paid for 39 weeks in total:
- First 6 weeks: 90% of your average weekly earnings (AWE). There is no cap on this — if you earn £60,000/year, the first 6 weeks are approximately £1038/week (about £1439/month).
- Weeks 7–39 (33 weeks): the lower of £187.18/week or 90% of AWE. For most employees earning above approximately £10815/year, this is the flat rate of £187.18/week (£811/month).
- Weeks 40–52 (13 weeks): unpaid (no statutory entitlement, though some employers offer occupational maternity pay).
To qualify for SMP, you must have been employed by the same employer for at least 26 weeks by the 15th week before your due date, and earn at least £20/week on average (the Lower Earnings Limit).
How is SMP taxed through PAYE?
SMP is processed through your normal payroll — your employer deducts income tax at 20% (or 40% if applicable) and National Insurance at 8% (on earnings above £20/week). However, the cumulative PAYE system works in your favour during maternity leave because the low SMP payments mean you accumulate unused Personal Allowance from earlier months.
Example: if you work full-time for months 1–6 (April–September) earning £35,000 pro-rata, then start maternity leave in October, your tax position resets. The tax you paid in months 1–6 assumed you would earn £35,000 for the full year. But your actual annual earnings are much lower (6 months salary + reduced SMP). When your employer recalculates in later months, you will likely receive tax refunds through your payslip because you have been overtaxed relative to your actual annual income.
This means many women on maternity leave see months where their SMP payment is higher than expected because HMRC is refunding overpaid tax from earlier in the year. This is normal and correct.
How does enhanced maternity pay affect tax?
Many employers offer enhanced maternity pay above the statutory minimum. Common arrangements include full pay for 3–6 months, or 90% pay for an extended period. Enhanced maternity pay is taxed identically to normal salary — full income tax and NI apply. Because enhanced pay is higher than SMP, you are more likely to actually pay tax during these months.
If your employer offers 6 months at full pay followed by SMP for the remainder, your tax will look fairly normal for the first 6 months and then drop significantly (possibly to zero) during the SMP-only period. Budget based on your enhanced package terms, not the statutory minimum.
Shared Parental Leave Pay (ShPP) is taxed the same way as SMP — at the statutory flat rate of £187.18/week, processed through PAYE with income tax and NI deducted.
How is Statutory Paternity Pay taxed?
Statutory Paternity Pay is £187.18/week (or 90% of AWE if lower) for 2 consecutive weeks. It is taxed as normal earnings through PAYE. At this level, the weekly amount is below the NI Primary Threshold (£20/week), so you typically pay no NI on SPP. Income tax is deducted but the cumulative system will account for it — if you return to full pay afterwards, the minor tax impact is negligible over the year.
Enhanced paternity pay (if offered by your employer) is taxed as normal salary. Some employers offer 2–4 weeks at full pay for paternity leave, which is treated as regular earnings with full tax and NI deductions.
How should I budget for maternity leave?
The income drop during maternity leave is significant. For a £35,000 salary, your monthly take-home drops from approximately £2481 before leave to about £811 during weeks 7–39 (the flat-rate SMP period). Plan for this by:
- Building a savings buffer of 3–6 months' expenses before your due date
- Understanding your employer's enhanced package (if any) and when it switches to statutory only
- Checking whether your pension contributions continue during leave (many employers continue employer contributions on your pre-leave salary)
- Reviewing childcare costs that will apply when you return — see our Tax-Free Childcare guide
Use the calculator at £35,000 to see your normal take-home, then compare against the SMP figure to understand the monthly shortfall you need to cover.
Does maternity leave affect my pension?
Your pension position during maternity leave depends on your scheme rules. Under auto-enrolment legislation, your employer must continue contributions on whatever pay you actually receive (including SMP). Many employers go further and continue contributions based on your pre-leave salary for some or all of your maternity period. Check your pension scheme handbook or ask HR for the specific rules. Any reduction in pension contributions during leave creates a gap that can be filled later through additional voluntary contributions.
Sources
- HMRC — Statutory Maternity Pay and Leave: pay. SMP rates: 90% for 6 weeks, then £187.18/week for 33 weeks. Accessed July 2026.
- HMRC — Statutory Paternity Pay and Leave: pay. SPP rate £187.18/week for 2 weeks. Accessed July 2026.
- HMRC — Income Tax rates and Personal Allowances. Basic rate 20%, Personal Allowance £12,579. Accessed July 2026.