Is statutory maternity pay subject to tax and national insurance?

Yes, statutory maternity pay (SMP) stands to be treated as normal earnings for the purpose of income tax and national insurance contributions.

SMP is payable to those who qualify for it for a period of up to 39 weeks, so long as the employee concerned remains absent from work on maternity leave. It is normally paid on the employee's usual pay days. There is, however, nothing to prevent the employer from paying employees the total amount of SMP due to them in a lump sum at the start of their period of maternity leave. This approach may, of course, result in an overpayment of SMP if the employee chooses to return to work before the end of a period of 39 weeks. This is because SMP cannot be paid to an employee who has returned to work. There may also be tax implications for the employee if SMP is paid as a lump sum.