Get on the right side of the taxman by understanding the rules around earning extra money during your maternity leave
Earning a bit of extra money while you’re on mat leave can be a great way to boost your bank balance – but it’s smart to be aware of the regulations around it.
To be honest, it depends on how much money we’re talking, as well as the additional time you’re working. Setting up a business or freelancing regularly after you’ve had your baby is different to selling a few newborn clothes on eBay, after all.
Still, if you’re going to do everything above board, check out our breakdown of the terms and conditions.
Your maternity pay
While you’re on leave, you can take 10 Keeping In Touch days, which let you go back into the office to catch up with colleagues and do some work. Both you and your employer need to be on board, but they’re a good way of staying in the loop, especially when it comes to settling back in after your leave is over.
But these days can also be used for paid self-employed work without it affecting your maternity pay – although it is at risk if you do more hours than this.
Remember to also check your company contract to find any specific mentions of additional work.
What the taxman says
There’s nothing too specific about making extra dollar on maternity leave but, basically, the same tax rules apply to extra-curricular earnings whether you have a baby or not.
‘You must inform the taxman as soon as you start earning money outside your regular employment,’ says Laura Hughes, Accountancy Training Manager at Crunch Accounting.
The same tax rules apply to extra-curricular earnings whether you have a baby or not
‘And make sure you're paying the correct amount of tax on your total earnings (i.e. your maternity pay plus your income from any self-employment) by completing a Self Assessment for the year the earnings take place. If you earn additional income during the 2013/14 tax year, you have until October 2014 to register for Self Assessment.’
Hello, national insurance
If business is booming (yay!) and your profits from any additional work are looking good, you may have to up your NI contributions.
‘If profits exceed £5,725, you'll have to start paying Class 2 National Insurance contributions of £2.70 per week,’ says Laura.
No matter the size of your new income, it’s always a good idea to keep records from the start – so things like bank statements and car mileage logs – even if it’s in a folder under your bed or on a computer spreadsheet.
‘Copies of invoices and receipts for expenses incurred can be kept in paper form, or HMRC allows you to back them up electronically too,’ says Laura.
Did you earn extra money on your maternity leave? Let us know on the comments board below.