tax paid on SMP paid in a lump sum
AdrienneMa
Posts: 4 Newbie
in Cutting tax
Hello,
I hope someone can help me.
I have been on.mateenity leave since December 2016 and I left work (resigned) on 14th March.
The remaining weeks of my SMP were paid in a lump sum at the end of the month. Because my annual income was over the personal allowance, they took tax on the whole amount. About £3000 was supposed to be in the next rax year 17/18 but because it was actually paid in 16/17 I lost out on £600.
HMRC cannot help and former employer believes there is nothing he could do. Is there really no way of getting the tax back?
It was basically a prepayment of an income due in 17/18. Could this not be taken into account?
Thank you in advance.
I hope someone can help me.
I have been on.mateenity leave since December 2016 and I left work (resigned) on 14th March.
The remaining weeks of my SMP were paid in a lump sum at the end of the month. Because my annual income was over the personal allowance, they took tax on the whole amount. About £3000 was supposed to be in the next rax year 17/18 but because it was actually paid in 16/17 I lost out on £600.
HMRC cannot help and former employer believes there is nothing he could do. Is there really no way of getting the tax back?
It was basically a prepayment of an income due in 17/18. Could this not be taken into account?
Thank you in advance.
0
Comments
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were you given any options regarding receiving the remainder of your SMP?
.gov guidance for employers (there is a section on statutory maternity)
https://www.gov.uk/employee-leaving
have you calculated the tax due v's tax paid for the entire tax year?0 -
No, I wasn't given any option. When I receiced my payslip I did ask them if this could be changed. They said as I left the company they could not keep me on the payroll system anymore hence it should be paid in a lump sum (first they didnt even know it has to be paid even if i leave)0
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AdrienneMa wrote: »... I left work (resigned) on 14th March.
There's the problem.0 -
Tax is charged in the year the payment is made.
The only way the SMP could be taxed in 2017/18 would be if you had remained on the books into that year and the payments were made in that year.0 -
Out of interest, why did you resign? If you just weren't planning to return you could have resigned at the end of your mat leave and accrued annual leave all the way through (as well as avoiding this tax situation). I don't understand the logic of resigning so early on in your mat leave so I'm really just hoping you haven't resigned in order to start working for a new employer, as that would cease your entitlement to SMP anyway.
Unfortunately the tax is correct, as sheramber has explained, so HMRC won't refund. Your payroll team haven't acted incorrectly either - if you're leaving the business then they're perfectly entitled to pay up the remainder of your SMP entitlement as a lump sum and process you as a leaver.
It was just incredibly unfortunate timing of your resignation really
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Thabks for all the responses. I resigned as moved abroad and I cannot be taxed in 2 member states. My understanding is that it should have been an agreement that I am getring paid in a lump sum but they did not even bother to contact me to advise. I sent them an email requesting some information and the answer was my payslip. I then tried to raise my issues with it but the response was that it has been submitted and they cannot help.
If I want to enforce this money do I jave any option?
Thanks0 -
I am not working! just for clarifiation0
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Unfortunately employers are not required to get the employee's agreement - the page linked above does sort of imply that it should be agreed between employer and employee, but ultimately there is no legislative requirement for the employee to agree to receiving a lump sum. It's pretty standard practice when an employee leaves to just pay up any remaining SMP in one go (I've probably done so over 100 times and never once sought agreement, although I do take the time to explain the implications to my ladies in case a situation like this could be avoidable). There's no route of appeal to force the employer to spread the payments throughout the remaining weeks of (what would have been) your maternity leave.
If the employer is not willing to help then I'm afraid I can't really see where you can go with this. From their perspective, they've not actually acted incorrectly and it's a bit of a faff around to correct payments from a previous tax year, so I can see why they're refusing to do it, especially 3 months down the line.
HMRC won't refund the tax you've paid as it is correct based on the payments made in the 16/17 tax year.
I'm sorry i can't give you any more positive advice.0
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