What childcare and family support is available for contractor-employed parents?
Another difficulty is the ambiguity around childcare support for self-employed people. That’s why we’re setting out the help that is available if you’re a self-employed parent, looking at three possibilities:
- Maternity/paternity pay
- Shared parental leave
- Tax-free childcare help
Without the benefit of maternity pay from an employer, self-employed women working under an umbrella company have to claim statutory maternity pay (SMP). But you have to have been employed (continuously) by the umbrella provider for a minimum of 26 weeks before the qualifying week (which is the 15th week before the due date).
If you’re not eligible for statutory maternity pay – like those without an umbrella company – you might come to rely on maternity allowance (MA) from the state. Unfortunately, there’s currently no equivalent (or statutory benefit) for self-employed fathers.
If you’re claiming maternity allowance on the basis of self-employment, you’re not required to provide proof of earnings and your household income won’t be taken into account. However, your NI contribution record will be checked.
A self-employed woman is treated as having the following earnings regardless of the amount you actually earn:
If you’ve paid sufficient class 2 NI contributions for at least 13 weeks in your 66-week test period, you’ll be treated as earning £156.66 a week. You’ll then be entitled to full-rate MA of £156.66 per week.
If your earnings are below the small profits threshold, you’ll be treated as earning £30 a week (the MA threshold), entitling you to the lower rate of MA of £27 per week (90% of your deemed average earnings).
For those entitled to the lower rate, you can only receive a higher rate of MA if you can add any employed earnings or you want to pay class 2 NI contributions voluntarily.
How to apply for maternity allowance
You can claim once you’ve been pregnant for 26 weeks. It’s a good idea to apply as soon as possible: it can only be backdated three months
Complete form MA1
Choose when to start the MA period – payments can start 11 weeks before the due date – unless you want it to automatically start once you give birth
If you give birth before your chosen date, call 0800 169 0283 and your MA will start the day after the birth.
Shared parental leave and pay
If a couple wants to share caring duties more evenly in the first year after a birth (or adoption), employed parents can have both statutory shared parental pay (ShPP) and shared parent leave (SPL).
With SPL, couples can share up to 50 weeks of leave, taken as flexibly as they want, to allow for periods of work. To qualify for this, self-employed people must be working under an umbrella company.
ShPP gives couples the option of essentially splitting the mother’s maternity pay (or adoption pay or maternity allowance) and transferring some to the father. This option is open to any type of self-employed contractors.
ShPP amounts to £156.66 a week, or 90% of the mother’s average weekly earnings (whichever figure is lower).
Tax-free childcare help
This is the government’s way of topping up a childcare fund you set up yourself. For every £8 you pay into the fund, the government will contribute £2, up to £2,000 per year (or £4,000 for a child with a disability).
Any type of self-employed contractor (umbrella company or not) can qualify for the scheme, as long as they’ll earn a sum equivalent to the National Minimum Wage or Living Wage over the next three months.
Special circumstances might apply if you’re self-employed and don’t expect to make that sum as profit in the upcoming three months: you can use an average of expected profits in the current tax year. And none of these earnings requirements apply if you started your business less than 12 months ago.
How to apply for tax-free childcare
- Check your eligibility
- Set up an online childcare account
- Register with an approved childcare provider
- Confirm you need the service every three months, otherwise the top-up contributions will stop
While childcare support is certainly harder to access if you’re self-employed, there are options available. We hope that we’ve made it a little easier to understand the help you could be entitled to – and that you can get the support you need.