How HMRC’s Delays Are Undermining Maternity Rights and Small Firms
How HMRC’s Delays Are Undermining Maternity Rights and Small Firms
In July 2024, I went on maternity leave.
It should have been a straightforward transition, a business owner stepping back for a few months to focus on family. Instead, it exposed a serious flaw in the UK’s support for working mothers and small businesses.
More than a year later, my company is still waiting for nearly £9,000 in statutory maternity pay reimbursement from HMRC.
That’s money we paid out in full, legally and correctly, that should have been reimbursed months ago. We’ve managed, thankfully, Mish is financially sound enough to absorb it, but many small businesses wouldn’t be. For them, that kind of delay could mean the difference between survival and closure.
It’s a scandal: a system designed to support working parents is, in reality, putting both employers and women rights at risk.
How statutory maternity pay is supposed to work
When an employee (or business owner on payroll) takes maternity leave, their employer pays Statutory Maternity Pay (SMP) for up to 39 weeks.
That’s 90% of their average earnings for the first six weeks, followed by the lower of a flat rate or 90% for the remaining 33 weeks.
Employers then reclaim that money from HMRC. For most, it’s 92% of what they’ve paid out.
For small employers, it’s 100% plus a small percentage uplift to cover admin costs.
In other words, small businesses aren’t supposed to be left out of pocket, at least, not for long.
But here’s the problem. If your PAYE bill isn’t large enough to offset those maternity payments, you must apply for a direct repayment from HMRC. And that’s where the delays begin.
What actually happened
My maternity leave began in July 2024 and ran for nine months, ending in March 2025.
Because the claim could only be submitted once the full maternity period had finished and the financial year had closed, we weren’t able to apply for reimbursement until April 2025.
I left it 28 days, assuming there might be some administrative lag, and then called HMRC to check the status. After almost an hour on hold, I finally spoke to someone who asked if I was “sitting down”.
He explained that due to internal backlogs and earlier industrial action, my company’s claim wouldn’t even be looked at until November 2025, sixteen months after maternity leave began and SMP payments started. That was their estimate back in May. I’ve heard nothing since, so who knows how much longer the wait will really be.
Industrial action, backlogs and broken systems
To be clear, this isn’t just my story. HMRC delays are now widespread:
- HMRC staff have taken industrial action since late 2024, causing major delays to employer refunds and PAYE processing.
- The Guardian reported in May 2025 that tax refund requests were taking four months or more to process.
- AccountingWeb and UHY Hacker Young confirm that employer and PAYE services have been heavily disrupted, with HMRC openly acknowledging the backlog in its own bulletins.
So, while my case may sound extreme, it’s really not unique. Thousands of small businesses are waiting on money they’ve already paid out, money intended to protect women and families during one of the most financially vulnerable periods of their lives.
The gendered cash-flow burden
By law, employers can reclaim every penny of statutory maternity pay, including the 90% pay for the first six weeks. But in practice, small employers have to cover the cost upfront — and then wait months, sometimes more than a year, to be reimbursed.
That delay doesn’t sound like much until you realise what it means in real life.
For a small retailer, café, or start-up, £9,000 could be 6 months’ rent, or several months’ of supplier payments. The cash-flow squeeze can push businesses into debt or worse. And because women are far more likely to take maternity leave, over a man taking shared parental leave. It’s women who feel the effects most sharply.
It’s not that HMRC refuses to pay (if they could, at least you could take them to court). It’s that the timing of repayment quietly punishes small employers, undermines financial stability, and perpetuates the gender gap the system is supposed to help close.
Why this matters for equality
If small employers begin to fear the financial burden of long-delayed maternity reimbursements, what happens next?
Hiring decisions change. Promotions are delayed. Conversations become uncomfortable.
A “congratulations” on pregnancy becomes quietly followed by: “We’ll need to see how we can afford it.”
Let’s be absolutely clear: conversations like that are illegal.
It is unlawful to discriminate against someone because they are pregnant or planning to take maternity leave. But these HMRC delays are pushing small businesses into intolerable positions, where simply meeting their legal obligation to pay maternity leave can jeopardise the company’s cash flow to the point of collapse.
And when a business goes under because of that, everyone loses, and there is no company for the new mother to return to. A system that’s supposed to protect women ends up punishing them, and their employers.
That’s how structural inequality takes root, not in overt discrimination, but in policies that look fair on paper and fail in practice.
What I believe needs to change
I don’t believe the system is deliberately unfair, but it’s outdated, under-resourced, and blind to the reality of small-business cash flow.
- Maternity reimbursements should be paid in real time
PAYE operates in real time, so maternity reimbursements should too. If a small business pays statutory maternity pay to an employee and its PAYE bill doesn’t cover that amount, then HMRC should automatically pay the balance at that point. Employers shouldn’t have to wait until the end of the maternity period, or even the end of the financial year, to submit a claim.Right now, there’s no automation at all. The money simply sits on HMRC’s system by default, held against future PAYE bills. If a company doesn’t proactively put in a claim, HMRC could hold that reimbursement for years, effectively keeping money that doesn’t belong to them.
- There must be a meaningful timeframe for repayment.
If HMRC can’t pay in real time then HMRC should process maternity claims within a clearly defined period, three months would be reasonable. There is some interest paid on delayed repayments, but it’s minimal. A few pounds of interest doesn’t help a business that’s thousands of pounds short and fighting to keep the lights on. At the point I rang in May 2025 there was £1.46 of interest!
- Maternity reimbursements must be prioritised.
These claims aren’t a “nice to have.” They’re legal entitlements, lifelines for small businesses and new mothers alike. SMP repayments should be ring-fenced as priority cases, not stuck behind a queue of general tax refunds.
- Small employers need access to bridging support.
For businesses that can’t afford to wait months for repayment, there should be a simple, accessible advance funding option. Expecting small employers to bankroll statutory payments for over a year is unreasonable and unsustainable.
- We need transparency and accountability.
HMRC should be required to publish quarterly data on how long SMP claims are taking to process. If the public could see the scale of the backlog, there’d be far more pressure for change.
- We must recognise the gender impact.
This is not just an accounting issue, it’s a gender-equality issue. Delays like this discourage employers from hiring or promoting women, and that has a long-term, corrosive effect on equality in the workplace. And to be completely honest, there have been times in our history when we didn’t have a spare £9000 in our bank account and on one occasion where we had two members of the team on maternity leave at the same time. If we had faced the delays in repayment we are facing now in either of those circumstances, it could have meant that Mish would be no more, and my team, 5 of whom are mums with young children, would have lost their jobs.
A system that should support, not punish
The UK often points to its maternity protections as something to be proud of, but the reality tells a different story. On paper, we have rights, safeguards, and entitlements. In practice, those protections are being eroded by delay, bureaucracy, and a lack of accountability. When maternity pay takes more than 15 months to be reimbursed, it stops being support and becomes another barrier.
Because this isn’t just about small businesses waiting for repayment. It’s about what that delay represents: a quiet but devastating step backwards for women’s equality at work.
Every late payment widens the gender pay gap. Every small business that hesitates to hire or promote a woman because of financial risk deepens inequality. And every mother caught in this system pays the highest price through lost income, lost opportunities, and a culture that still treats motherhood as a liability.
HMRC may see this as an administrative issue. But for thousands of women, it’s personal. It’s the difference between being valued and being sidelined.
This needs to change, and it needs to change now!
Sources:
GOV.UK – Recover statutory payments
Maternity Action – Statutory maternity pay questions
The Guardian – HMRC refund delays (May 2025)
UHY Hacker Young – Industrial action at HMRC
AccountingWeb – HMRC employer services backlogs
Intelligent Payroll – Small Employers’ Relief changes 2025–26