Navigating parenthood, children and money

Becoming a parent is a life-changing experience, and navigating the complexities of work and parenting can be daunting. Understanding your rights to maternity leave, pay and other benefits is crucial to navigating parenthood, children and money. This article provides a comprehensive guide to parenthood, covering maternity leave and pay, child benefit, free childcare and saving for your little ones.

Maternity pay and leave

In the UK eligible employees can claim statutory maternity pay while eligible self-employed individuals can claim maternity allowance. Maternity allowance may be available if you do not qualify for statutory maternity pay.

Statutory maternity pay and leave

If you are an employee, earn over £123 a week and have worked for the same company for at least 26 weeks by the qualifying week you are eligible for statutory maternity pay and leave. The qualifying week is the 15th week before the due date of your baby.

Statutory maternity leave

UK Statutory maternity leave is 52 weeks, the first 26 weeks are ordinary maternity leave and the last 26 weeks are additional maternity leave. You do not have to take the full 52 weeks leave. Legally you must take 2 weeks off after the birth of your baby and 4 weeks if you work in a factory.

Statutory maternity pay

In the UK statutory maternity pay is paid by the government with employers usually contributing a small percentage. Statutory maternity pay is paid for 39 weeks through payroll and is subject to tax and national insurance. The first 6 weeks are paid at 90% of your average earnings at the qualifying week. The following 33 weeks are paid at the statutory rate of £184.03 or 90% of your average weekly earnings, whichever is lower.

Use the HMRC tool to check your eligibility for statutory maternity pay:

Check if you can get Maternity or Paternity Leave or Pay, or Maternity Allowance – GOV.UK (www.gov.uk)

Calculating your average pay

Your average pay is calculated based on your gross earnings in the 2 months or 8 weeks before the qualifying week. The qualifying week is the 15th week before the Sunday of the week of the baby’s due date.

What is the earliest you can start maternity leave?

The earliest you can start your maternity leave is usually 11 weeks before the due date.

Letting your employer know you are pregnant

You must let your employer know you are pregnant at least 15 weeks before your baby’s due date. You must also let your employer know when you wish to start your maternity leave. Your midwife or doctor will issue you with a MATB1 certificate 20 weeks before the baby’s due date, which provides proof of pregnancy. If you wish to change the start date of your maternity leave you must give your employer 28 days’ notice.

Taking maternity leave – Maternity leave and pay – Acas

Additional employer paid maternity pay

Some employers pay more than statutory maternity pay. If your employer offers additional or enhanced contractual maternity pay as part of your employment, the terms should be included in your employment contract. Employers usually require any enhanced maternity pay to be reimbursed if you do not return to work or leave within a specified time after maternity leave.

There is no requirement to repay statutory maternity pay if you do not return to work at the end of your maternity leave.

Other resources:

Work out your employee’s payments for Statutory Maternity Pay – GOV.UK (www.gov.uk)

Maternity pay and leave: Overview – GOV.UK (www.gov.uk)

Home – Maternity Action

Other rights during maternity leave

While on maternity leave, you are entitled to your normal contractual rights such as leave, employer pension contributions, the right to return to work and pay increases.

Pension

You are entitled to your usual employer pension contributions while on maternity leave. Your employer’s contribution is based on your usual pay and not on maternity pay. Your employee contributions will be a percentage of your maternity pay unless you agree a different amount with your employer.

Pay increases

You are entitled to pay increases during maternity leave. Your employer cannot withhold a pay increase because you are on maternity leave.

If the pay increase is effective within the start of the 8 week relevant period for statutory maternity and the end of the statutory leave period, your employer must recalculate your average weekly earnings. They must pay you any extra SMP that is due. This means any pay increases you receive from around the 17th week of pregnancy until the end of your maternity leave must be included or adjusted for in your SMP and paid to you.

Keeping in touch days – KIT days

Keeping in touch days are voluntary working days that allow employees on maternity leave to maintain a connection with their employer. You can work up to 10 days without affecting your maternity leave and pay. KIT days are useful for keeping up to speed on company developments, training, etc. You need to agree your rate of pay for KIT days with your employer.

Maternity allowance

If you are self-employed or do not qualify for statutory maternity pay you may be eligible for maternity allowance. Maternity allowance is available for up to 39 weeks and payments can start anytime between the 11th week before your due date and the day after the baby’s birth.

You may be eligible for maternity allowance if you are employed but cannot get SMP, are self-employed, have stopped working recently or do unpaid work for the business of your spouse or partner. You can apply once you are 26 weeks pregnant.

To be eligible for maternity allowance for 39 weeks you must have been:

• Registered as self-employed for at least 26 weeks during the 66 weeks before the baby’s due date
• Been employed for at least 26 weeks during the 66 weeks before your baby’s due date and have been earning at least £30 a week for at least 13 weeks.

You may be entitled to up to 14 weeks of maternity allowance if you have done unpaid work for your spouse/partner’s business, for at least 26 weeks in the 66 weeks before the baby’s due date. Your spouse/partner must have been registered as self-employed with HMRC and paid Class 2 national insurance contributions for 26 weeks during the 66 week period.

You can check your eligibility for maternity allowance using HMRC’s online calculator:

Check if you can get Maternity or Paternity Leave or Pay, or Maternity Allowance – GOV.UK (www.gov.uk)

How much is maternity allowance?

If you are employed or have recently given up working, you will receive £184.03 a week or 90% of your average weekly earnings, whichever is lower.

The maternity allowance is between £27 and £184.03 a week if you are self-employed. The rate is dependent on how many Class 2 national insurance contributions you have paid during the 66 weeks before the baby’s due date. To receive the full maternity allowance of £184.03 you must have paid Class 2 contributions for at least 13 weeks of the 66 weeks. If you haven’t paid any Class 2 contributions, you will be entitled to £27 a week.

Maternity Allowance: What you’ll get – GOV.UK (www.gov.uk)

Paternity pay and leave

When your partner has a baby you may be eligible to take 1 or 2 weeks of paid paternity leave. Statutory paternity leave is £184.03 a week or 90% of your average weekly earnings, whichever is lower. The HMRC link provides more detail about paternity leave:

Paternity pay and leave: Overview – GOV.UK (www.gov.uk)

Shared parental leave and pay

If eligible, you and your partner may be able to share parental leave and pay. The eligibility criteria for shared parental leave and pay is different for birth parents and adoptive parents/surrogacy. You can find all the details on HMRC’s website:

Shared Parental Leave and Pay: How it works – GOV.UK (www.gov.uk)

Child benefit

Once you have registered the birth of your baby you can claim child benefit. You will receive £25.60 a week for the first child and £16.95 a week for subsequent children. It is usually paid every 4 weeks and can only be paid to one parent. If you or your partner earn more than £60,000 a year, you may have to repay some or all of the child benefit. It is important to claim child benefit as it gives you national insurance credits, that count towards your state pension.

To apply and learn more about child benefit:

Child Benefit: How it works – GOV.UK (www.gov.uk)

Childcare

Childcare is costly for parents and the government are introducing additional free childcare to help parents. Eligible parents can get between 15 and 30 hours of free childcare a week and benefit from tax relief on childcare payments.

Tax-free childcare

The government tax-free scheme provides tax relief on childcare costs for working parents. For every £8 you pay into your online childcare account, the government will contribute £2. You can get up to £2,000 a year, or £500 every 3 months to help towards childcare costs. Your childcare provider must be signed up to the government scheme. If you or your partner have earnings over £100,000 you won’t be eligible for this scheme.

Tax-Free Childcare – GOV.UK (www.gov.uk)

Free childcare

All 3 to 4 year old children in the UK can get 15 hours of free childcare a week for 38 weeks, regardless of the earnings and work status of the parents. This is a universal right for all parents.

If you are working and eligible you can apply for 15 hours of free childcare if your child is between 9 months and 2 years and 30 hours if your child is 3 to 4 years old. From September 2025, children from 9 months to 2 years are eligible for 30 hours of free childcare.

Parents who work and meet the following eligibility requirements can receive additional free hours of childcare :

Working parents in England who each earn more than the equivalent of 16 hours at the National Minimum Wage (currently that is £8,670, or at least £167 per week), but less than £100,000 adjusted net income per year.

Help paying for childcare: 15 hours free childcare for 3 and 4-year-olds – GOV.UK (www.gov.uk)

Get free childcare if you’re working: step by step – GOV.UK (www.gov.uk)

Check you’re eligible for free childcare if you’re working – GOV.UK (www.gov.uk)

Not returning to work or working reduced hours?

If you are not returning to work or working reduced hours there some tax benefits to be aware of.

Marriage allowance

If you are not working or earn less than the personal allowance of £12,570 and don’t pay tax, you may be eligible to transfer up to £1,260 of your tax-free allowance to your spouse or civil partner. To be eligible your spouse or civil partner must pay tax at the basic rate of 20% which usually means they earn less than £50,270. Transferring the allowance can save couples up to £252 in tax annually.

Marriage and Married Couple’s Allowance | MoneyHelper

Pension tax relief

Individuals who are not working or paying tax can contribute £2,880 into a personal pension and receive tax relief of £720 annually, increasing their annual contribution to £3,600.

Child benefit

Applying for child benefit under your name gives you national insurance credits towards your state pension. For couples, the partner with the lower income should apply for child benefit.

Saving early for your little ones

With the current financial pressures, saving early for your little ones is an invaluable gift. You can invest on your child’s behalf in the stock market with a JISA and into a child pension.

JISA or junior ISA

Parents or guardians can open a tax-free junior ISA on behalf of a child. Investing in a stock market fund can deliver a substantial nest egg for a child over an 18 year period. For example, if you invest child benefit of £102 every 4 weeks into a fund returning 7%, after 18 years your child will have around £48,000. This is equivalent to approximately £28,000 in today’s money. The FTSE100 has returned an average of 7% since its inception, so this is an achievable return and better than most savings accounts offer.

Pensions for children

Children can have pensions and contribute £2,880 a year and receive £720 of tax relief, increasing the annual contribution to £3,600. Anyone can contribute to a child’s pension. Rather than buying children endless toys as presents, ask family members and friends to contribute to their pension. It’s a bit boring, but your children will thank you in the long term.

Contributing the full amount of £3,600 over 18 years with a 7% return will grow to around £123,000. This could allow your child to retire early. Although most people can’t save these amounts on behalf of their children, even small regular amounts invested or saved can grow significantly with time.

Should I invest money in a JISA or a pension for my child?

One of the main factors in deciding to invest money in a JISA or pension is when your child can access the funds. Your child will only have access to their pension once they turn 57 and the age limit may increase. Whereas with a JISA, your child can access the funds once they turn 18. Another factor is the additional tax relief of 20% that children receive on pension contributions. Finally, consider the annual contribution limits, which are £3,600 for a child pension and £9,000 for JISAs.

For comparison, let’s assume a more realistic monthly contribution of £40. Investing £40 a month into a child’s pension with a 7% annual return could grow to around £21,000 after 18 years. Tax relief increases the contribution to £50 or £600 annually. Whereas investing £40 into a JISA will generate around £17,000 after 18 years. A JISA gives more flexibility as your child can withdraw some or all the money when they turn 18. Your child can use some of the JISA money for immediate needs and may choose to invest some in a pension and benefit from tax relief.