Having a Baby:
Tax & Benefits Guide
Last reviewed: April 2026
A new baby brings Statutory Maternity Pay, Child Benefit decisions, Tax-Free Childcare and potential PAYE changes. Here is what every new parent needs to know.
At a glance
- ✓SMP pays 90% of average earnings for 6 weeks, then £184.03/week for 33 weeks
- ✓Child Benefit is £25.60/week (first child) — but is clawed back if either parent earns over £60,000
- ✓Tax-Free Childcare gives 20p top-up on every 80p you put in — worth up to £2,000/child/year
- ✓If you earn over £60,000, you may need to register for Self Assessment to pay the Child Benefit charge
Statutory Maternity Pay (SMP) 2026/27
SMP is paid by your employer for up to 39 weeks if you have worked for them for at least 26 weeks before the 15th week before your baby is due, and earn at least £123/week on average.
| Period | Amount | Notes |
|---|---|---|
| Weeks 1–6 | 90% of average weekly earnings | No cap |
| Weeks 7–39 | £184.03/week | Or 90% AWE if lower |
| Weeks 40–52 | £0 | Unpaid (SMP ends at week 39) |
Many employers offer enhanced maternity pay above SMP — check your contract. SMP is taxable and subject to NI, so your payslip will show deductions even during leave.
Child Benefit and the High Income Charge
Child Benefit is £25.60/week for the eldest child and £16.95/week for each additional child (2026/27 rates). You can claim from birth until the child is 16 (or 20 in full-time education).
The High Income Child Benefit Charge (HICBC) applies if either parent has adjusted net income above £60,000. For every £200 of income between £60,000 and £80,000, you repay 1% of the Child Benefit received. Above £80,000, the full Child Benefit is clawed back.
Should you still claim Child Benefit if you earn £80,000+?
Yes — always claim, even if you will pay it all back. Claiming protects your NI record during any gap in employment, which affects your State Pension. You can opt out of receiving payment separately to the claim itself.
Tax-Free Childcare
Tax-Free Childcare gives you a 20% top-up on childcare costs, up to £2,000 per child per year (£4,000 for disabled children). For every £8 you pay into your TFC account, the government adds £2 — making it effectively a 25% discount on childcare.
You qualify if you work at least 16 hours per week, each parent earns less than £100,000/year, and your child is under 12. You cannot claim both Tax-Free Childcare and childcare vouchers (the old scheme).
Frequently asked questions
Frequently asked questions
Is Statutory Maternity Pay taxable?
Yes. SMP is treated as employment income and is subject to income tax and National Insurance, just like ordinary wages. However, because SMP is lower than a typical salary, many people pay less tax during maternity leave — or none at all if their annualised SMP falls below the Personal Allowance.
Do I have to pay Child Benefit back if my income is too high?
Not automatically — you need to complete a Self Assessment tax return each year you receive Child Benefit and your (or your partner's) income exceeds £60,000. The High Income Child Benefit Tax Charge (HICBC) claws it back at 1% per £200 of income above £60,000, fully withdrawn at £80,000.
What are KIT days?
Keeping In Touch (KIT) days allow you to work up to 10 days during SMP without losing your SMP entitlement for that week. You and your employer agree the rate — you receive the higher of your normal pay or SMP for those days. They are optional and must be agreed in advance.
Can my partner claim Shared Parental Leave?
Yes. Shared Parental Leave (SPL) lets parents share up to 50 weeks of leave and 37 weeks of Statutory Shared Parental Pay (ShPP). ShPP is currently £184.03/week (or 90% of AWE if lower). Both parents must meet eligibility criteria based on employment and earnings.