Is maternity pay taxed?

Statutory Maternity Pay is taxed in the same way as salary. Your employer pays it through payroll, deducts income tax under your normal tax code and charges National Insurance on it where your earnings are high enough. Enhanced maternity pay from the NHS, schools and councils is treated the same way. Because your income usually drops sharply during leave, many people pay little tax for the rest of that year and get some back through payroll.

What SMP pays in 2026/27

SMP is paid for up to 39 weeks:

Period	Weekly rate
First 6 weeks	90% of your average weekly earnings
Next 33 weeks	£194.32, or 90% of average weekly earnings if lower

To get SMP you need 26 weeks’ continuous service with your employer by the 15th week before the week your baby is due, and average earnings of at least the Lower Earnings Limit of £129 a week. Maternity leave itself is 52 weeks, so the last 13 weeks are unpaid unless your employer’s scheme says otherwise. Maternity leave covers notice rules and dates.

Maternity Allowance, paid by the DWP to people who do not qualify for SMP, is a benefit and is not taxed.

Occupational maternity pay

Public sector schemes usually pay more than SMP in the early months, with SMP included in the total. NHS Agenda for Change staff and teachers under the Burgundy Book both have contractual schemes that pay some weeks at full pay and some at half pay plus SMP, with conditions about returning to work. All of it is taxed as earnings. NHS maternity pay and teacher maternity pay explain each scheme and the repayment rules if you do not return.

Why tax refunds turn up during leave

On a cumulative tax code such as 1257L, payroll compares your pay for the tax year so far with the allowance built up so far. During the high-paid early weeks of leave your tax may look normal. Once you are on £194.32 a week, which is about £842 a month, your pay is below the monthly allowance of £1,048. Each month on the flat rate, the unused allowance builds up and payroll can refund tax you paid earlier in the year.

Say you earn £2,600 a month and start leave in September. By the time the flat rate starts, payroll has taxed you on several full months, and the low months that follow give back part of that tax. The refund shows on your payslip as negative tax. On a non-cumulative code (ending M1 or W1) none of this happens and you would wait until after 5 April; see Month 1 and Week 1 tax codes.

Where leave spans two tax years, the effect is spread across both. During unpaid weeks there may be no payroll run, so any remaining overpayment is settled when your pay restarts or after the tax year ends. Claiming a tax refund covers what to do if it does not come through.

National Insurance and student loans

Employee National Insurance is worked out for each pay period. You pay 8 per cent on weekly earnings between £242 and £967. The flat rate of £194.32 is below £242, so on SMP alone you pay no employee NI. In the first six weeks at 90 per cent of earnings, or while getting enhanced pay, NI is charged as normal.

Student loan deductions also use per-period thresholds, so they usually stop while you are on the flat rate and restart when your pay goes back up.

Pension during maternity leave

During paid maternity leave you stay in your workplace pension, and your own contributions are based on the pay you actually receive, so they fall when your pay falls. Your employer’s contributions continue on the basis of your normal salary during the paid period. Unpaid weeks are treated differently by each scheme. Some public sector schemes let you pay contributions for an unpaid period so it counts towards your pension, usually within a time limit after you return. Ask your scheme administrator or HR before the deadline passes; the decision is yours, and the scheme can explain the cost.

Child Benefit and the income charge

Child Benefit is not taxed, but if you or your partner has adjusted net income above £60,000, the High Income Child Benefit Charge claws it back at 1 per cent for every £200, with all of it repaid at £80,000. A year with maternity leave often has lower income, which can take you below the threshold. Child Benefit rates and claiming explains how to claim even if you expect to repay it, which protects your National Insurance record.