When a member of your team announces they're expecting, it's a moment worth celebrating. It also brings a set of legal responsibilities that every UK employer — from a sole trader with one member of staff to a growing SME — must handle correctly. Statutory Maternity Pay (SMP) is one of the most important. Get it wrong and you risk penalties from HMRC, damage to employee trust, and potential employment tribunal claims. Get it right and you demonstrate that your business is a fair, well-run place to work.
This guide walks through everything UK small business owners and their accountants need to know about SMP: who qualifies, how much to pay, when to pay it, and how to reclaim the cost.
What Is Statutory Maternity Pay?
Statutory Maternity Pay is a government-mandated benefit paid by employers to eligible employees who take maternity leave. It is not discretionary — if an employee meets the qualifying criteria, you are legally required to pay it. SMP is administered through your payroll, meaning you pay the employee as normal and then reclaim most (or in some cases all) of the cost from HMRC.
It is worth distinguishing SMP from Maternity Allowance, which is claimed directly from the Department for Work and Pensions (DWP) by those who do not qualify for SMP — typically the self-employed or employees who haven't met the earnings or service thresholds. As an employer, Maternity Allowance is not your responsibility, but it is helpful to be able to point ineligible employees in the right direction.
Who Qualifies for SMP?
Not every pregnant employee will automatically be entitled to SMP. There are three eligibility conditions that must all be met:
- Continuous employment: The employee must have been continuously employed by you for at least 26 weeks ending with the 15th week before their expected week of childbirth (known as the qualifying week).
- Minimum earnings: Their average weekly earnings in the eight weeks leading up to and including the qualifying week must be at least equal to the Lower Earnings Limit (LEL) for National Insurance — currently £123 per week for 2024/25.
- Notification: The employee must give you at least 28 days' notice before their intended start date for maternity leave, and provide medical evidence of the pregnancy (typically a MATB1 certificate issued by a midwife or GP no earlier than 20 weeks before the expected due date).
If an employee does not meet all three conditions, you cannot pay SMP. In that case, you must issue them an SMP1 form within seven days of making that decision, so they can pursue Maternity Allowance instead.
How Much Is SMP and How Long Does It Last?
SMP is paid for up to 39 weeks. The rate is split into two tiers:
- First six weeks: 90% of the employee's average weekly earnings (AWE) — no upper cap.
- Remaining 33 weeks: The lower of 90% of AWE or the flat statutory rate, which is £184.03 per week for 2024/25 (rising to £187.18 per week from April 2025).
To illustrate: suppose an employee earns £600 per week on average. For the first six weeks, you pay £540 per week (90% of £600). For the following 33 weeks, you pay £184.03 per week, because the flat rate is lower than 90% of her earnings.
SMP is treated as earnings, so it is subject to income tax and National Insurance contributions in the usual way. You should process it through your payroll software alongside any other pay the employee receives during that period.
One thing small employers sometimes overlook: SMP cannot be reduced or withheld because the employee has told you she will not be returning to work. Once entitlement is established, you must pay it for the full 39 weeks regardless of her intentions.
Reclaiming SMP From HMRC
Here is the part that reassures most small business owners: you do not bear the full cost of SMP yourself. HMRC allows employers to reclaim SMP payments through their payroll, deducting the amount from PAYE, National Insurance, and other payments due to HMRC.
The reclaim rates depend on your business size:
- Small employers (those whose total Class 1 NI liability in the previous tax year was £45,000 or less) can reclaim 103% of SMP paid — the extra 3% is a small employer's relief to cover administration costs.
- Larger employers can reclaim 92% of SMP paid.
The reclaim is made through your Full Payment Submission (FPS) or Employer Payment Summary (EPS) as part of your RTI payroll submissions to HMRC. It is not a separate claim process — it is embedded in your routine payroll reporting, which is why accurate payroll software matters so much.
Platforms like BizHub365 handle RTI submissions — including FPS and EPS filings — directly via HMRC's API, which means SMP reclaims are factored into your monthly payroll run without the need for bridging software or manual calculations. For a small business owner managing payroll alongside everything else, that kind of automation significantly reduces the risk of errors or missed submissions.
Practical Steps for Employers: A Clear Process
Managing SMP correctly comes down to following a clear process each time. Here is what that looks like in practice:
- Receive the MATB1 certificate and the employee's written notification of her intended leave start date. Keep copies of both documents.
- Calculate the qualifying week — count back 15 weeks from the expected week of childbirth — and check the employee's continuous service and AWE against the LEL.
- Confirm entitlement in writing within 28 days of receiving notification. You can use HMRC's model letter or draft your own, stating the start and end dates of SMP.
- If the employee does not qualify, issue an SMP1 form within seven days of your decision and explain their Maternity Allowance options.
- Set up the SMP payments in your payroll, ensuring the correct split between the 90% period and the flat rate period, and that tax and NI deductions are applied correctly.
- Reclaim through your EPS after each payroll period, confirming the amount of SMP paid and your eligibility for small employer's relief if applicable.
Keep thorough records of all SMP calculations and correspondence. HMRC can inspect payroll records going back several years, and having clear documentation will protect you if a query arises.
Common Mistakes Small Employers Make
A few errors crop up repeatedly in small businesses:
- Miscalculating average weekly earnings. AWE is calculated over a specific reference period — typically the eight weeks before the qualifying week — and must include all regular payments including bonuses and commission. Using the wrong figure affects both the employee's entitlement and your reclaim.
- Missing the SMP1 deadline. Failing to issue an SMP1 form promptly when an employee doesn't qualify can leave her unable to claim Maternity Allowance in time, which creates serious goodwill issues and potentially legal exposure.
- Stopping SMP when an employee says she won't return. As noted above, this is not permitted. SMP and the decision to return to work are entirely separate matters.
- Forgetting keep-in-touch (KIT) days. Employees on maternity leave can work up to ten KIT days without losing SMP entitlement. These must be agreed by both parties, and any pay for KIT days is in addition to SMP — they do not offset it.
Conclusion
Statutory Maternity Pay is one of those areas of employment law where precision really matters. The eligibility rules, the two-tier payment structure, the reclaim process, and the documentation requirements all need to be handled accurately — and the consequences of getting things wrong fall on both employer and employee.
For most small businesses, the key is having a reliable payroll process that handles the calculations, the RTI submissions, and the HMRC reclaims without you needing to chase every figure manually. Whether you use a dedicated payroll provider or an integrated platform like BizHub365, the important thing is that your system is HMRC-compliant and keeps a clear audit trail.
The good news? SMP is genuinely manageable once you understand the framework. Follow the steps, keep your records in order, and you can support your employees through a significant life event without any undue stress on the business.