The expensive part of a first-year baby budget may be the income you lose during leave rather than the things you buy. A monthly cash-flow plan shows when pay drops, when childcare starts and whether savings need to bridge a gap.
Get your employer's pay schedule in writing
Ask HR or payroll for the pay schedule, deductions, pension treatment and conditions attached to any enhanced maternity pay. In particular, check whether enhanced pay has a return-to-work or repayment condition. Do not assume a colleague's arrangement applies to you.
Separate leave entitlement from pay
Statutory Maternity Leave is 52 weeks. Eligible Statutory Maternity Pay is paid for up to 39 weeks: 90% of average weekly earnings before tax for the first six weeks, then £194.32 or 90% of average weekly earnings, whichever is lower, for the next 33 weeks under the current published rate.
Tax and National Insurance are deducted. That weekly rate is not take-home monthly pay, and future rate changes may affect a leave period crossing tax years. Employer-enhanced pay may change the picture. If taking the full 52 weeks and receiving only SMP, plan for the leave after SMP ends; check whether any other pay or support applies.
SMP is subject to eligibility tests about employment, earnings, notice and evidence. If you do not qualify, check Maternity Allowance rather than assuming no support is available. Use GOV.UK and your employer for an entitlement decision.
Create a monthly cash-flow table
- Record confirmed take-home income for each parent, month by month.
- Separate essentials such as housing and bills from discretionary spending.
- Put one-off baby purchases in the month you expect to pay, rather than spreading them invisibly across the year.
- Record savings used and the balance remaining at the end of each month.
- Add a separate buffer for costs you cannot yet price; decide its size from your own situation.
Do not use one average maternity-pay figure for the whole leave period. It can hide the month when employer pay ends or statutory pay drops. Payroll estimates are more useful than applying a tax percentage to a gross statutory weekly figure.
Check Child Benefit even when income is high
The High Income Child Benefit Charge can apply when either partner's adjusted net income exceeds £60,000. Under the rules for tax years starting from 2024/25, the charge is 1% of Child Benefit for each £200 above that threshold, with the full amount repaid at £80,000 or more. The higher-income partner is responsible if both are above the threshold.
Registering for Child Benefit and opting out of payments is different from not claiming. GOV.UK says opting out keeps the registration, National Insurance credits and the child's automatic National Insurance number. Credits can matter when the claimant is not working or not earning enough to pay National Insurance. Check which parent should claim and your actual annual adjusted net income, including the effect of leave.
Price the return to work before leave starts
- Get a nursery quote for the intended return date and attendance pattern.
- Check when funded hours can begin and whether you qualify, rather than assuming the first invoice will include them.
- Check Tax-Free Childcare separately and avoid counting its top-up twice.
- Model a reduced-hours return as well as the planned working pattern.
- Ask about deposits and settling-in arrangements so their timing is visible.
The nursery-budget guide separates funded hours, Tax-Free Childcare and the bill left over. The adjusted net income guide explains the £100k eligibility test for each parent.
Shared leave needs its own calculation
Shared Parental Leave may let eligible parents share up to 50 weeks of leave and up to 37 weeks of pay in the first year. It has separate eligibility and notice rules. Do not treat it as an extra block of fully paid leave added on top of maternity pay; ask both employers to confirm the plan and pay schedule.
Start with a free childcare chapter
The £100k Baby, by Practical Finance, covers leave, Child Benefit, childcare, pensions and a year-one checklist. This article promotes the book. General information, not personal financial or tax advice. Rules checked on 30 September 2026; check the official sources for your circumstances.