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Statutory Maternity Pay is an important employment right that supports families at a crucial time and, when planned well, helps small businesses retain valued people and keep operations running smoothly. If you run a small business, there’s a lot to keep track of, but it doesn’t have to be difficult.

This guide explains what Statutory Maternity Pay (SMP) is, what you’re responsible for, how eligibility really works, what to pay, and exactly how the reclaim system works. As a small employer you can usually reclaim most – and sometimes slightly more than all – of the statutory payments you make.

SMP at a glance

• Duration: up to 39 weeks of pay during maternity leave
• Pay: first 6 weeks at 90% of average weekly earnings, then 33 weeks at £187.18 or 90% of AWE, whichever is lower (2025-26)
• Reclaim: most employers reclaim 92% via the Employer Payment Summary; if last year’s Class 1 NI was £45,000 or less you can reclaim 108.5% under Small Employers’ Relief

What SMP actually is (and what it isn’t)

SMP is the legal minimum you must pay eligible employees while they’re on maternity leave. It lasts up to 39 weeks and is paid through your normal payroll run. You continue to deduct tax and National Insurance as usual – SMP isn’t a separate bank transfer or a grant that arrives from HMRC on the day it’s due.

For the 2025-26 tax year, SMP is paid as:

• First 6 weeks: 90% of the employee’s average weekly earnings (AWE)
• Next 33 weeks: £187.18 a week or 90% of AWE, whichever is lower

You can offer enhanced maternity pay if you want to be more generous, but SMP is the legal minimum you must meet.

Who qualifies? The four-part test explained

An employee qualifies for SMP if all four boxes below are ticked:

1. They’re on your payroll in the “qualifying week”
   This is the 15th week before the expected week of childbirth. If they leave before this week, they won’t qualify with you (though they might claim Maternity Allowance directly from the state).
   
2. They’ve been employed by you for at least 26 weeks by that qualifying week
   This is continuous employment – part-time counts, zero-hours counts, and time on sick leave counts if they were still employed.
   
3. They earn at least the Lower Earnings Limit on average
   For 2025-26, that’s £125 a week (before tax). HMRC looks at the relevant 8-week pay period before the end of the qualifying week. This catches many people out: it’s not “what they earn now”, it’s the average over that specific window.
   
4. They give you the right notice and proof
   They must tell you when they want their leave and pay to start (at least 28 days’ notice) and give you proof of the due date – usually the MATB1 form from a midwife or GP.

Summary: if someone’s been with you for 6+ months by roughly month 6 of pregnancy, has average pay of £125+ a week in the set window, and gives you the MATB1 and notice, you’ll be required to pay SMP.

The timeline – how it plays out in real life

• Employee tells you they’re pregnant – make a note of the expected week of childbirth (EWC)
• Qualifying week – count back 15 weeks from the EWC
• Notice – at least 28 days before SMP is due to start
• SMP start – as early as 11 weeks before the EWC, or automatically if birth or pregnancy-related illness happens in the 4 weeks before the EWC
• Pay – via payroll on normal payday
• Reclaim – report and reclaim through Employer Payment Summary (EPS)

How much do I pay?

Average Weekly Earnings (AWE) = total gross pay in the relevant 8-week period ÷ 8

• Weeks 1-6 = 90% of AWE
• Weeks 7-39 = £187.18 or 90% of AWE, whichever is lower

Worked example:
Employee’s AWE is £400/week

• Weeks 1-6: 90% of £400 = £360/week → £2,160 total
• Weeks 7-39: lower of £187.18 and 90% of £400 (£360) is £187.18 → £6,176.94 total
• Total SMP: £8,336.94 across 39 weeks

If pay varies, AWE may look high or low compared to recent shifts – but it is fixed to that 8-week window.

When someone isn’t entitled to SMP

If the employee fails any part of the test, you must give them form SMP1 within 7 days of your decision. This allows them to claim Maternity Allowance instead.

Common reasons:

• Joined after the qualifying week
• Average pay below £125/week in the relevant window
• Not employed long enough
• Proof or notice not provided

KIT days – staying in touch without losing SMP

Employees can work up to 10 Keeping In Touch (KIT) days during maternity leave without stopping SMP. These must be agreed in advance. You decide the pay rate, separate from SMP.

Holiday, bank holidays and other employment rights

• Holiday continues to accrue during maternity leave, including bank holidays
• Holiday cannot be taken during maternity leave, so plan before or after
• Redundancy protection rules apply – employees on maternity leave must be offered suitable alternative roles first

Record-keeping – what to keep and for how long

Keep SMP records for 3 years after the tax year ends:

• MATB1 and notice of start date
• SMP1 if issued
• SMP start date, amounts paid and dates
• Amount reclaimed from HMRC
• Any unpaid weeks and reasons

How to reclaim SMP – step by step

1. Run payroll with SMP included
2. File your FPS as usual
3. Submit an EPS showing the SMP reclaim
4. The reclaim reduces PAYE/NIC due to HMRC

How much can I reclaim?

• Standard recovery: 92% of SMP paid
• Small Employers’ Relief: 108.5% if Class 1 NI was £45,000 or less

If cash is tight you can apply to HMRC for advance funding.

Edge cases small employers often ask about

• Directors are employees for SMP, but only actual earnings count
• Employees with multiple jobs may qualify from each employer separately
• Backdated pay rises can affect AWE if they fall in the relevant period
• If employment ends after SMP starts, payments continue until return date

Common mistakes (and how to avoid them)

• Using the wrong 8-week earnings window
• Not issuing SMP1 within 7 days when required
• Missing MATB1 or unclear start dates
• Forgetting to claim Small Employers’ Relief
• Delaying reclaims until year-end
• Assuming KIT days stop SMP (they don’t)

How CRM Accountants can help

Statutory Maternity Pay is an important safety net for new mothers, but the rules can be complex if you’ve never dealt with them before. Our payroll service can help you navigate SMP, stay compliant and reclaim the correct amount – leaving you free to focus on running your business.

Contact us to book a free, no obligation consultation and get tailored advice that gives you peace of mind.