How is Shared Parental Leave pay taxed in the UK?

Full answer

What Is Shared Parental Leave Pay Shared Parental Leave (SPL) allows eligible parents to share up to 50 weeks of leave and up to 37 weeks of Statutory Shared Parental Pay (ShPP) in the first year after birth or adoption. Both parents can take SPL simultaneously or in turns, subject to giving the employer the required notice. The Standard Rate of ShPP For 2026/27, the standard rate of ShPP is GBP 194.32 per week, or 90% of average weekly earnings if that is lower. This same figure applies to Statutory Maternity Pay (SMP) and Statutory Paternity Pay (SPP) during the flat-rate portion. How ShPP Is Taxed ShPP is earnings for income tax purposes. Your employer pays it through payroll under PAYE, deducting income tax and employee National Insurance contributions in the same way as regular salary. If your total income in the tax year (including ShPP weeks and any weeks of normal pay) keeps you within the basic-rate band, tax is deducted at 20%. If you are a higher-rate taxpayer, the ShPP itself may still be taxed at 20% (because GBP 194.32/week is below the higher-rate threshold when annualised) but your other income could still attract 40%. National Insurance on ShPP Employee NI at 8% applies to ShPP above the Primary Threshold (equivalent to GBP 12,570 per year). Because ShPP is GBP 194.32/week (approximately GBP 10,104 annualised for a full year), it falls below the annual Primary Threshold, so NI deductions are minimal or nil if ShPP is the only income during that period. Employer NI (15% in 2026/27) applies above the secondary threshold of GBP 5,000. Employer Top-Up Pay Many employers offer enhanced ShPP above the statutory minimum. Any employer top-up is also taxable employment income, subject to PAYE and NI in the normal way. Self-Employed and SPL Self-employed individuals are not entitled to ShPP. They may qualify for Maternity Allowance (GBP 184.03/week in 2025/26; check current rate) but SPL is an employee-only entitlement. Tax Code During Leave Your tax code remains active during leave. If you return part-way through a tax year, your employer will reconcile cumulative pay and tax to ensure the correct amount is deducted overall. Any overpayment of tax is refunded through payroll or via a Self Assessment return.

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