Maternity pay as lump sum - tax implications?

Chopsie&Chelvis

Hi everyone,

I have accepted voluntary severance from my employer, with my last day as 31st March and my severance pay paid on 15th April. I understand that this is tax free.

However, I am also pregnant and qualify for SMP, which they have said they will pay as a lump sum on the same day. I presume I will pay tax on my SMP, the same as everyone else - however, will I pay more by receiving it as a lump sum? I've tried to look into this on the internet, but I'm feeling a bit confused! I'm worried it's going to look like I've recieved a massive pay packet and be taxed accordingly, when it's actually my only income for the 2011-2012 tax year!

Thanks for the help.

Lauren

[Deleted User]

If your SMP is paid in April (which is definately the better option) initially you will pay more tax on it, however if your are not intending to work all Year you will be able to claim this back April 2012 or if you return to work after 9 Months you will get a rebate in your pay. If you get lump sum in March you could be taxed 40% on some of it (Depending on your earnings) which you won't get back. If you know a figure post it or pm me and I'll do you a calculation :-)

Chopsie&Chelvis

Deleted_User wrote: »

If your SMP is paid in April (which is definately the better option) initially you will pay more tax on it, however if your are not intending to work all Year you will be able to claim this back April 2012 or if you return to work after 9 Months you will get a rebate in your pay. If you get lump sum in March you could be taxed 40% on some of it (Depending on your earnings) which you won't get back. If you know a figure post it or pm me and I'll do you a calculation :-)

Thank you very much, I will PM you now.

Lauren