Can you claim tax on maternity pay?

My employer has agreed to maternity pay of 8 weeks full pay, 18 weeks at 50% pay and final 13 weeks at SMP rate. I will be on maternity leave for one year in total and this will start in a new financial year. Could you advise how they should be taxing this/ or how I can work out how much tax I should be paying on this?

All Maternity Pay is taxable. (However Maternity Allowance as a benefit is not.)

You may have heard stories of other mums getting big tax refunds when they went on maternity leave but to qualify for the refund you have to actually have paid the tax in the tax year. This is unlikely in this case.

The good news, though, is that in the 2013-2014 tax year the standard Personal Tax Free Allowance rises to £9,205. If your total earnings in the tax year are less than this figure then you will not pay any tax.

I am assuming that you have no other taxable income or benefits which would reduce your tax free allowance.

 




Comments [6]

  • Dan says:

    Hi My Wife goes on maternity leave next week and will be off till January next year on statutory maternity pay.
    Will she still be eligible for her £11,800 personal tax allowance when she goes back for the last 3 months of the tax year?
    Obviously she will pay some tax for April this year.
    Regards
    Dan

  • Kizzle says:

    I am due to start maternity leave on 1st March 2018, so my first SMP payment will be on 28th March. Unfortunately, this means it hits the tail end of the 2017-2018 financial year, and will be taxed highly with no scope for refund. Is it possible to delay the first SMP payment by a month so that it falls on 28th April 2018, even though my leave would commence on the 1st March? (NB, due date is 1st April, but yet to see how accurate that is!) I would still then be taxed heavily if first payment was delayed by a month, but by the end of that financial year my earnings would have dropped so considerably that I would expect to get a refund. I’d be very grateful if you have any thoughts on this. Many thanks

  • Anonymous says:

    I posted this query earlier, but think in the wrong place. I'm trying to understand how, if I've paid tax on PILON I can also be taxed on "Company maternity pay" – which I received as a lump sum at the same time but was not equivalent to co maternity pay per se as it did not include pension contributions or bonus or accrual of leave. Further, the two sums cover the same period so I do not see how both could be "earnings". Could you help clarify for me please? Many thanks in advance for your advice.

    Editor: Our tax expert Des Desai has answered this on your other post.

  • Anonymous says:

    I posted this query earlier, but think in the wrong place. I'm trying to understand how, if I've paid tax on PILON, I can also be taxed on "Company maternity pay" – which I received as a lump sum at the same time, but was not equivalent to company maternity pay per se as it did not include pension contributions or bonus or accrual of leave. Further, the two sums cover the same period so I do not see how both could be "earnings". Could you help clarify for me please? Many thanks in advance for your advice.

    Editor: I will get advice from our tax expert and get back to you asap. Check this page. Our tax expert Des Desai says if Payment In Lieu is a Contractual Right and written into the Employment Contract it is likely to be taxable. If it not, then it can be argued that the payment is tax free, but even then it is not cut and dried. If it is not written into the employee’s contract, the employer is likely to be in breach of contract in terminating the employee's employment without proper notice. As a result, the payment made to the employee is not a payment under the terms of the contract of employment, which would be taxable; instead it is an advance payment of damages, aimed at compensating the employee for the employer's breach of contract and avoiding a potential legal claim. In this case, the payment will be tax free up to £30,000.

    The complication here is the Maternity Pay which is clearly taxable. He says to give full advice he would need a chronology of when you received the different payments, what periods they cover, when this took place and more details about what your contract states. You can send these via our Advice & Support/Q & A page box.


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