SMP is paid through the tax office to the business which you then pass onto yourself in weekly or monthly instalments as the employee just like you would PAYE.
SMP (Statutory Maternity Pay) is 90% of your weekly salary for the first 6 weeks and then £124.88 for the remaining 33 weeks. So 9 months in total and although it might not seem a lot it really is better than a kick in the teeth. On top of that the business is paid 4.25% for administering the SMP (bonus)
As soon as you get your MATB1 form from the midwife go onto the HMRC website Calculating and recovering Statutory Maternity Pay http://www.hmrc.gov.uk/paye/employees/statutory-pay/smp-calc.htm
You can calculate your SMP entitlement online http://www.hmrc.gov.uk/calcs/smp.htm this will tell you week by week how much you will get and what administration fee you can claim too.
If you are a one man band like me you don't pay enough NI and Tax to claim in back off these payment so you can apply for the full amount to be sent to you by the tax man. Simply fill out an online form https://online.hmrc.gov.uk/shortforms/form/DMB_SMP?dept-name=DMB&sub-dept-name=AdvancePayments&location=1&origin=http://www.hmrc.gov.uk and a cheque will appear in the post for you. Apply in advance and like me you can pop in in a high interest account until it's needed and make some interest too.
If the 9 months of maternity pay spans 2 tax years you will get an initial cheque to cover year 1 then in April a subsequent cheque for the remainder for year 2. Oh you also need to split the claim into 2 tax years but the online forms pretty much guide you through this.
You can spend it when you like of course or pay it out as normal as part of your PAYE. If you don't already use the HMRC CD ROM for your payroll I can recommend you getting a copy, simply call the new employer helpline on 0845 607 0143. This easily allows you to run a PAYE system which does all your totals for you and tells you what to pay to who and when.
There are some FAQs at http://www.hmrc.gov.uk/employers/smp-faq.htm with regards to SMP. It's all rather easy as it turns out.
