Is Maternity Pay Taxed? Tax & National Insurance on SMP Explained

Is Maternity Pay Taxed in the UK?

The short answer: Statutory Maternity Pay (SMP) is taxed, but Maternity Allowance (MA) is not. This is one of the most important differences between the two benefits, and it can significantly affect how much money actually reaches your bank account.

How SMP Is Taxed

SMP is treated as earnings by HMRC. This means it's subject to:

•Income Tax — at your normal rate (20%, 40%, or 45% depending on your total annual income)

•Employee National Insurance — at 8% on earnings between £242 and £967 per week

Your employer deducts these through the PAYE system, just like they would with your normal salary. The amount deducted appears on your payslip each pay period.

Tax During the 90% Period (Weeks 1-6)

During the first 6 weeks, your SMP is 90% of your average weekly earnings. If your normal salary is £35,000, that's about £605.77/week. At this level, you'll pay both Income Tax (20%) and National Insurance (8%) on the amount above the respective thresholds.

Tax During the Flat-Rate Period (Weeks 7-39)

Here's where it gets interesting. The flat rate of £194.32 per week translates to approximately £10,105 on an annualised basis. This is below the Personal Allowance of £12,570, which means:

•No Income Tax would be due if this were your only income for the year

•No National Insurance because £194.32 is below the NI Primary Threshold of £242/week

However, tax is calculated cumulatively through PAYE. If you earned your full salary for part of the tax year before starting maternity leave, you may have already used up some of your Personal Allowance.

Why You Might Be Owed a Tax Refund

Many women on maternity leave are owed a tax refund without realising it. This happens because:

1.Your employer's PAYE system may have been deducting tax as if you'd earn your full salary all year

2.When your income drops to SMP levels, you've potentially overpaid tax in earlier months

3.The cumulative tax calculation should adjust this, but it doesn't always happen smoothly

How to Check

•Check your payslip: Look at the cumulative tax figures. If your cumulative tax paid exceeds what's due on your cumulative earnings, you're owed money

•Use your Personal Tax Account: Log in to HMRC's online service to see your tax position

•Wait for your P60: At the end of the tax year, your P60 will show your total earnings and tax paid

•Contact HMRC: Call 0300 200 3300 if you think you've overpaid

Maternity Allowance — Tax-Free

Unlike SMP, Maternity Allowance is completely tax-free. The £194.32/week maximum goes straight into your bank account with zero deductions. This is because MA is paid by the DWP as a benefit, not by your employer as earnings.

This means the take-home difference between SMP and MA during the flat-rate period is minimal:

•SMP flat rate: £194.32/week (little or no tax/NI in practice)

•MA maximum: £194.32/week (guaranteed no tax/NI)

The real difference is in weeks 1-6, where SMP at 90% of earnings can be significantly more than the MA maximum.

Tax Codes During Maternity Leave

Your tax code should remain the same during maternity leave — typically 1257L for 2026/27. This code gives you the full Personal Allowance of £12,570.

If you notice your tax code has changed, check with your employer or HMRC. Common reasons for tax code changes during maternity leave:

•Company benefits (car, private health) continuing during leave

•Student loan deductions

•Outstanding tax from previous years

•Errors in HMRC's records

National Insurance Credits

Even when your SMP is below the NI threshold and you're not paying contributions, you're still protected:

•Weeks receiving SMP are treated as qualifying weeks for State Pension purposes

•Child Benefit provides additional NI credits for the claiming parent

•Your NI record won't have gaps during maternity leave

This is particularly important for your future State Pension entitlement. Read more about this in our guide to Child Benefit.

Pension Contributions and Tax

During maternity leave, your employer must continue their pension contributions based on your normal salary (not your reduced SMP). Your own contributions, however, are based on your actual pay:

•During weeks 1-6 (90% pay): Your pension contribution is based on the higher SMP amount

•During weeks 7-39 (flat rate): Your contribution is based on £194.32/week

•During weeks 40-52 (unpaid): Neither employer nor employee contributions are required

The employer's continued contributions at the normal rate provide valuable tax-efficient pension growth during maternity leave.

Use Our Calculators

To see exactly how tax affects your maternity pay:

•Take-Home Pay Calculator — see your after-tax maternity pay

•Maternity Pay Calculator — calculate your gross SMP

•Maternity Allowance Calculator — check your tax-free MA entitlement

•Child Benefit Calculator — additional tax-free income

Read More

•How much maternity pay will I get?

•SMP explained

•Financial planning for maternity