Is Maternity Pay Taxed?
Quick Answer
Yes, Statutory Maternity Pay is taxable and subject to National Insurance, just like normal salary. Many people still pay less tax overall during maternity leave because their total income for the year is lower.
How Much Is Statutory Maternity Pay?
SMP is paid at 90% of your average weekly earnings for the first 6 weeks, then the lower of a fixed weekly rate (check GOV.UK for the current amount) or 90% of your average weekly earnings, for up to 33 further weeks — 39 weeks of SMP in total.
How It's Taxed
SMP is treated as normal earnings for tax purposes and taxed through PAYE using your usual tax code. Because the weekly amount is often lower than your normal salary, your overall tax bill for the year is often lower too, even though the payments themselves are taxable.
Enhanced/Contractual Maternity Pay
If your employer offers enhanced maternity pay on top of the statutory minimum, this is taxed exactly the same way — through PAYE at your normal Income Tax and National Insurance rates.
Effect on Other Benefits
Maternity pay counts as income for things like the High Income Child Benefit Charge and Universal Credit calculations. Since your total income is often lower while on leave, the impact on these is usually smaller than it would be at your normal salary.