From Full-Time Income to Statutory Pay: How Parental Leave Impacts Monthly Budgets
For most new parents in the UK, taking maternity or paternity leave means a sharp reduction in household income. While time at home with a newborn is invaluable, the transition from a full-time wage to Statutory Maternity Pay (SMP) or Statutory Paternity Pay (SPP) can be financially daunting. In this blog, we explore how this shift impacts monthly budgets, the scale of income loss, and what it means for families trying to make ends meet.
The Numbers: UK Average Income vs Statutory Pay
As of early 2024, the average UK monthly wage (before tax) is £2,500 – £3,000, translating to a take-home pay of around £2,000 – £2,400 after tax (Office for National Statistics, 2024).
In contrast, Statutory Maternity Pay (SMP) and Statutory Paternity Pay (SPP) will be £187.18 per week as of April 2025 (Gov.uk, 2025). That equals:
£748.72 per 4-week month
£812.11 per calendar month (based on 52 weeks ÷ 12 months)
Income Reduction: The Hard Reality
When comparing the average monthly take-home wage to SMP/SPP:
Income drops by £1,200 – £1,600 per month
This equates to a 60% – 67% income reduction during maternity or paternity leave
For higher earners, the gap is even wider, unless their employer offers enhanced maternity/paternity pay, which supplements statutory pay for a set period.
Example:
A parent earning £2,200/month take-home now receives £812, resulting in a £1,388 shortfall each month.
The Impact on Monthly Budgets
With such a dramatic drop in income, many parents must reassess their spending and prioritise essentials. Here’s how typical monthly expenses can be affected:
Baby Essentials
Nappies, formula, clothes, and basic toiletries: £89 – £140/month
Household Costs
Gas & electricity: £180 – £200/month
Food: £280 – £400/month
Car & fuel: £250 – £300/month
Housing
Rent: £1,200/month (average)
Mortgage: £800 – £1,000/month
Childcare (if applicable)
Full-time: £1,200 – £1,500/month
For many, these figures exceed the £812/month received through SMP/SPP, forcing families to dip into savings, rely on a partner’s income, or take on debt to bridge the gap.
Government Support: Limited Relief
Some relief is available through:
Child Benefit: £24.00/week for first child = £96/month
Tax-Free Childcare: Up to £2,000/year towards childcare (eligibility applies)
Universal Credit or Income Support (for low-income households)
However, these benefits often don’t fully compensate for the lost income, especially for middle-income families who don’t qualify for means-tested support.
Planning Ahead: Financial Strategies
To prepare for the income drop, many families have to:
Save in advance: Aim for 3–6 months of expenses to cover gaps
Budget tightly: Track spending and cut non-essentials
Explore enhanced employer pay: Some offer full pay for 6 weeks, or part pay for longer
Consider shared parental leave: Flexibility to divide leave between parents, potentially balancing earnings
Final Thoughts
Taking time off to bond with a new baby is priceless, but the financial strain of statutory pay can be significant. Planning ahead, understanding your entitlements, and reassessing your monthly budget can make the transition smoother.
Ultimately, awareness is key. By knowing what to expect, families can avoid financial shock, make informed decisions about returning to work, and focus more on the joys of early parenthood than the stress of finances. However, the burden should not fall on families alone.
Sources:
Office for National Statistics (2024)
Gov.uk Statutory Pay Rates
MoneyHelper UK
Coram Family and Childcare Survey (2024)