Self employed drawings during maternity leave

Little_Miss_Penny_Less

Hi Everyone,

I have a slightly complex situation I would love some of your knowledgable advice on.

I have just returned from maternity leave to my employer (A), whilst on maternity I bought a franchise (B) and am in the process of setting up as self employed running weekly classes. The idea was that I would work for 6 months doing both roles (3 days at A, 2 days at then quit A and work part time at B.

I've just found out I'm pregnant again, due in 7 months. Please lets not start on the morals as that will be by my own conscience what I decide to do in the end - I'm just interested in your financial advice here please, we can debate the morals in moneysavers moral dilemma if you like...

I think the best financial stance will be to remain at A and be paid maternity leave from them. I will employ someone to run the franchise classes whilst I am on maternity leave, perhaps working KIT days or going into partnership with my husband and having him do the admin side.

What would happen to any profit that the business makes while I am on maternity? Usually these would be my drawings but surely I cannot make any drawings on the business whilst in receipt of maternity pay from my employer? Could I leave any profit in the accounts until my return from maternity leave and take them as drawings then?

Any advice very gratefully received. I will speak to an accountant about it in person as soon as I am able to make an appointment but some pointers to get my head to stop swirling would be ever so nice at this point!

Thanks so much

CLAPTON

assuming you are self employed, you are taxed on your profit; what you 'draw ' has nothing to do with anything

Annisele

Little_Miss_Penny_Less wrote: »

What would happen to any profit that the business makes while I am on maternity?

Exactly the same thing that happens to it when you're not on maternity. As Clapton says, if you're self employed the amount you choose to draw doesn't affect your business' profits. You are your business, so whether the cash lives in your account or the business' account makes no difference to the tax you pay.

tyllwyd

I found this
http://businessplusbaby.com/2010/12/13/self-employment-during-your-maternity-pay-period/
which seems to say that your self-employed earnings won't affect your SMP.

Cook_County

You will of course need to involve your employer - A - as your contract probably prohibits other work, so this may be grounds to dismiss you on grounds of conduct. Does A know you have another business?

ceeforcat

Self employed earnings do not affect SMP in the same way if you had two or more jobs. If earning sufficiently at each you would receive SMP from each.

What would happen to any profit that the business makes while I am on maternity? Usually these would be my drawings but surely I cannot make any drawings on the business whilst in receipt of maternity pay from my employer? Could I leave any profit in the accounts until my return from maternity leave and take them as drawings then?

You seem to be (as many are) of the belief that your profit is your drawings or vice-versa. If you draw 20000 from your business and it makes a profit of £5000, you will be taxed on 5000 - the only unhappy person will be your bank manager.

Little_Miss_Penny_Less

Thank you all for your replies, I think I've got confused somewhere along the way - of course it would be the same position tax wise regardless of when in the tax year I make profit - it will be tax on the years profit that makes perfect sense.

I think I need a HR forum, as it's more an issue of whether I can earn money from the self employment without losing SMP. Thanks for the link above that's really helpful, I think I'll correct DWP for clarification too.

Thank you all again