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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.
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Comments [35]
Anonymous says:
Hi,
I receive 4 months full pay then 2 months half pay but my HR department can’t tell me what my income will look like or if I will still get taxed. Even though the half pay months will fall under the tax bracket. Am I better to get in touch with hmrc to pre empt the fact I will be below the tax bracket rather than waiting for a rebate?
Mandy Garner says:
It is definitely worth getting in touch with HMRC if you are worried about overpayments in any tax year, although it should be repaid automatically – see https://www.workingmums.co.uk/will-tax-overpaid-on-maternity-leave-be-repaid-automatically/
TK says:
Hi, I went on my maternity and got maternity pay as a lump sum in Dec 21, as my contract ended and not renewed. So I’ve paid tax on all of it in my last payslip. I understand that if it was paid as usual monthly, I wouldn’t pay any tax on payments after April 22, 17 weeks, as it would have been under the personal allowance threshold ( I’m not earning anything in 22/23). Is there anything I can do to claim back? Thank you
Mandy Garner says:
You should be compensated automatically at the end of the tax year, but it might be a good idea to also inform HMRC. If you fill in a tax return you can apply to HMRC by letter to request an “in-year” adjustment . It is best to do this by letter sent RECORDED DELIVERY so you can follow it up as it may take a number of weeks to process.
On the letter state:
The payslip where the lump sum payment was made.
Expected earnings for 2022/23.
If you do not fill in a tax return, fill in the Form R40.
Jo says:
Hi, I am due to start my maternity leave on 18th October. I will get full pay for 18 weeks ( only if I return to work after maternity leave) then basic SMP. I decide not to coming back so I will need to return part of my OMP. What happen with tax in this case? As I will return OMP in the new tax year (when my maternity leave ends) how it will be count? THANK YOU
Mandy Garner says:
Occupational maternity pay is a benefit provided by your employer and you will need to check your contract or maternity policy for your employer’s terms and conditions.
Zoe says:
Heyy, I started my maternity August 2020. I received 14weeks of OMP and 26weeks of SMP ending May 2021, I have paid similar tax throughout that I would have been paying on a full time wage. Will I be due any tax back or do I need to apply for this?
Thank you 🙂
Mandy Garner says:
You should be compensated automatically in the next tax year, but it might be a good idea to also inform HMRC.
Zoe says:
Thank you so much
Anon says:
Hello,
I am currently on maternity leave and my 52 weeks leave will end at the start of May. This month I will receive the last of my paid leave, so I will be on unpaid leave from then until the day I’m due back.
Due to childcare difficulties I will not be returning to work. I anticipate my final pay will include outstanding annual leave owed and 6 weeks full pay for the notice period (as per s87 ERA), so 10 weeks pay in total (approx. £3,000). This will be my only income for the year as I do not intend to return to work until baby starts school in a few years time. Will May’s pay be taxed as they have to anticipate I will go on to earn more elsewhere that tax year? Or will it be tax free as my income for the tax year to date will be below the threshold? If I do get taxed, would that get refunded after next April?
Many thanks!
Mandy Garner says:
Hi, If your income falls beneath the tax threshold you would not have to pay tax. If you are taxed based on assumed earnings, it should be refunded automatically the next year, but you could contact HMRC in the meantime.
DG says:
Hi, I am on 25k a year, went on mat leave mid July 2020 and will earn about 15k during mat leave, I am back July 2021, will I get any tax back in April? Thanks
Mandy Garner says:
HMRC will not be able to do anything until the end of the financial year as your employer has to let them know how much you have actually earned this year to see whether you are due any back. Here is the link to claim a tax rebate: https://www.gov.uk/check-income-tax-last-year.
Lyndsey says:
Hi
I have just returned back to work after maternity leave. September was a month of holidays and I noticed I didn’t pay any tax. Will this continue to not pay any tax until I earn 12500? Since April I’ve only earned just under 5k due to mat pay
Thanks
Mandy Garner says:
You should check this with your payroll.
Clare says:
I went on maternity in May 2019 until feb 2020. I received maternity for the time I was off and was paid for the other months whilst working. Will I receive a tax refund this year??
Mandy Garner says:
see https://www.workingmums.co.uk/will-tax-overpaid-on-maternity-leave-be-repaid-automatically/
Keeley says:
Hi, I went on maternity leave on December 13th and was last taxed in January. My work started paying some of my tax back to me until the new tax year in April. Could this mean I’m entitled to a tax rebate and my work place was trying to take some of the rebate money off by paying it me back themselves??
Mandy Garner says:
The best thing is to contact HMRC and explain your situation.
K O'Brien says:
I am currently on furlough and been mad redundant from 31st July. My SMP starts 30th June 2020 until April 2021 however due to been redundant my company are paying me SMP in a lump sum on 31st July therefore I will be taxed. Can I claim this tax back from HMRC?
Mandy Garner says:
It is fairly common for SMP to be paid in a lump sum on redundancy. If you go back to work after your maternity leave then your tax refund will come back at that point. If not, you should claim your overpayment direct from HMRC – see http://www.hmrc.gov.uk/incometax/overpaid-thro-job.htm. Another solution would be to try and negotiate a delayed redundancy from your employer if your redundancy comes through after your maternity leave starts so that you were kept on payroll during your maternity leave, but they may not want to do this.
Sam says:
Hi, I am on maternity leave for 12 months since July 2019. My company pays 100% base pay for 12 months. My salary is between 30K to 40K per year and my husband’s salary +50K. Is there any tax credit or return which I can get? someone told me during maternity leave we need to pay less tax so my salary will be higher. Is this true?
Thanks
Mandy Garner says:
Hi, You say you are getting paid your full salary for 12 months or is this full salary minus commissions so significantly less than you normally earn? If you are being paid less, you should get any tax overpayment back in the following tax year, but you might want to check with HMRC.
Simon Mealing says:
Hi there, my mrs has been on statutory maternity pay for the last 9 months and now is receiving £0 from anyone. I’ve applied for CTC but been told we are not entitled to anything!! Now being furloughed with 80% pay myself we are left in a very hard position. Nobody wants to help so I was hoping you could tell me if my mrs is entitled to her old contract with 80% pay until her return to work and also if we could claim a tax rebate for her?? Thanks in advance
Mandy Garner says:
Hi,
Is her maternity leave due to come to an end soon ie what date did she give for her return, if any? If none, it is assumed she will take 12 months off and she would need to give eight weeks’ notice of return. Are her colleagues being furloughed? She may be able to be furloughed if she cannot work due to her employer being closed, but she could not be furloughed due to a lack of childcare as you are on furlough so could look after your baby. Have you checked on http://www.turn2us.org.uk if there are any other benefits you may be entitled to – they have an online benefits calculator which will tell you what you are entitled to if you enter your details. Could you supply a bit more information on why you might claim a tax rebate? The article you have commented on gives details of whether this is applicable. Also, while you are on furlough, you may be able to do other paid work for another employer to supplement your income – you would just need to check that your contract allows you to do this.
Chantelle says:
I went on maternity in January and last month (March) I had my first pay of Maternity wages. Will I get a tax rebate?
Mandy Garner says:
Could you provide a few more details to [email protected]? Do you mean on your 2019/2020 earnings and have you already paid tax in advance? Are you claiming SMP or MA?
Gemma summers says:
Hi, I am planning on going on maternity leave on the 20 April. We usually get our bonuses paid in April’s salary. If my maternity pay starts on the 20 April, will I be taxed at the higher rate or lower rate when my bonus is paid?
Mandy Garner says:
Will your bonus be paid before the end of the current tax year [5th April]? If not, it would depend on your earnings for 2020/21 plus SMP, which is taxable [I am not sure if you get enhanced maternity leave]. If you earn different amounts each month it should adjust automatically.
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
Mandy Garner says:
Hi Dan,
I’ve checked this with our tax expert and he says she would still be eligible.
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
Mandy Garner says:
Hi,
In the first six weeks of SMP you will be paid at 90% of your normal salary. SMP cannot be delayed after the birth [ie it must start the day after birth], but you can change the date you start your maternity leave and you can change the date you receive SMP if you give 28 days’ notice – see https://www.gov.uk/employers-maternity-pay-leave/notice-period. Your tax will be based on your annual earnings and if you have overpaid you can claim it back.
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.