This blog is for all the self-employed parents out there who are planning to have a baby and wondering how to top up their income while they’re caring for their little one!
Having been there myself, I know that welcoming a child into the world is like nothing else you’ll ever experience. It’s a magical time that needs to be protected – and yet many of us who work for ourselves are torn between spending every minute soaking up our newborns and earning a living to keep a roof over our heads.
Unfortunately, there is limited support available for entrepreneurs who are planning to start or expand their family. But there are a few options out there to help you bridge any gaps in your finances and access the support you need to continue running your business alongside parenthood.
Things to think about as a self-employed mum or dad
You don’t have the luxury of paid time off
You’re probably all too aware that, as a self-employed parent, you don’t have the same rights to “maternity leave” from an employer (because you are your own “employer”). So, you’ll need to plan how your business will operate while you care for your baby.
Firstly, you should assess how much income you’ll need during the baby’s first months and whether your business will generate enough to cover the expected expenditure, factoring in a possible drop in earnings, childcare costs (if applicable), and any support you’re eligible for. Your income stream is likely to be unpredictable, so you must take this into account, too. The more you can save while you’re earning, the better.
Planning is essential – don’t get complacent!
When you’re ready to get back in the saddle, you will most likely benefit from planning a phased return to work or reduced working hours, depending on how flexible your business can be.
If you can, you could consider outsourcing work to a trusted associate – even if it’s just in the short term – as this will keep things ticking over while you’re focusing on family life.
Staying on top of your admin is more important than ever
If you haven’t done already, you should register as self-employed with HMRC as early as possible, keep up-to-date bookkeeping, pay your Class 2 (and other) National Insurance contributions, and keep evidence of your trading (invoices, etc). These will all affect your eligibility for maternity allowance, universal credit and other government-funded support, so you can’t afford to cut corners here. (If there’s ever a time to employ a bookkeeper like me, its now!)
If it’s the best option for you, you need to apply for childcare ASAP
Finding childcare is often one of the trickiest jobs for new parents who are self-employed. Family members are often happy to step up, so ask them if they are happy to do a regular shift or two. This will save you some cash and help them bond with the little one.
If you need to go down the route of finding a nursery or childminder, the sooner you enquire, the better. Places get filled quickly, especially now the government is offering funded childcare hours from the term after your child turns 9 months old (more on this later).
What support is available?
Maternity Allowance (and parental equivalents)
If you’re self-employed, you don’t have the same statutory maternity pay/leave entitlements as employees, but you can claim Maternity Allowance in many cases.
The rules differ depending on how long you’ve been trading and your National Insurance contributions. It’s worth checking the current threshold on the Gov.uk website or giving HMRC a ring if you need clarification for your individual circumstances.
If your partner is employed, their rights (for example, shared parental leave/pay) may apply and you should check how your self-employment status interacts with those.
Child Benefit
You can claim Child Benefit for a child under 16 (or under 20 if in approved education/training) – even if you’re self-employed. However, remember that if you (or your partner) earn over a certain threshold (at the moment, £60,000), you may face the High Income Child Benefit Charge, so it’s wise to check how your business income will affect that. Here’s how it works.
Universal Credit (UC)
If your self-employment income is low (or you stop trading or change your working hours because you’ve had a baby), you may be eligible for UC, which can help with living and housing costs.
There are special rules for self-employed claimants:
- You must show your self-employment is your main work (your “gainful self-employment”).
- The assessment may use a “minimum income floor” (an assumed level of earnings) when you’re self-employed, meaning even if you earn less, the benefit may be reduced as if you earned more.
- During a “start-up period” (if you’ve recently begun trading) the minimum income floor might not apply for the first year.
Childcare-related initiatives
- Tax‑Free Childcare. This helps working parents with childcare costs up to a certain cap.
- Free Childcare for Working Parents. Now, working mums and dads in England can access 30 hours of free childcare per week for children aged 9 months to 4 years old, starting the term after the child turns 9 months. if you’re self-employed and started the business less than 12 months ago you may still qualify under the “free childcare for working parents” rules.
Both schemes are subject to eligibility criteria – each parent needs to earn a minimum amount (but not exceed a maximum amount), and there are rules around residing in the UK.
Questions you need to ask yourself before baby arrives
If you’re self-employed and expecting, here’s a handy list of the things you need to check before applying for funding and other means of support:
- Are you registered as self-employed (HMRC) and making National Insurance contributions?
- What is your expected income now the baby is on the way? Will you reduce your trading hours?
- Are you eligible to claim Maternity Allowance (for this, you’ll typically need to check your National Insurance contributions history and trading history)
- Are you eligible for Child Benefit (usually yes) and what your family income is compared to the high income charge threshold?
- If your income drops, can you claim Universal Credit (and have you checked how your self-employment will be assessed)?
- Are you eligible for childcare cost support (Tax-Free Childcare, free hours) given your self-employment status and income?
- Do you have a filing system for your business (with invoices, receipts, and up-to-date accounts)? This helps with benefit claims
If you’re in any doubt as to what you’re entitled to, the best thing you can do is speak to a benefits adviser via your local council or a charity like Citizens Advice or Turn2us. This is especially important if you’re self-employed, because the rules can often be more complex (and confusing!).
You can also use Advicelocal to find details of independent advice organisations in your own area, by entering your postcode.
There are also support lines you can use if you’re worried about money or how things are going to work financially when your baby is here. Help Through Hardship (0808 208 2138) is a good starting point if you’re feeling overwhelmed.
Getting prepared now will get you in a better position later – and ensure you can enjoy getting to know your son or daughter without worrying about your financial situation.
