Lump sum Statutory Maternity Pay and Tax

SamN

Hi,

I am just about to finish my 1 year contract with my current employers and this means I have to start my maternity period mid May.

Because I qualified whilst working with them, my company are paying my Statutory Maternity Pay (SMP) in one lump sum in my final pay in May as I will no longer be employed by them.

I will therefore be unemployed but on SMP with all my tax deductions for my SMP being taken in my May Payslip. I will have only paid 1.5 months tax from my normal pay in this tax year then I will be on SMP till Feb 2012.

So my question is, can I claim my tax back before the end of this tax year 2011/12 as I will not be working (if I do work I have to pay back the SMP to my Ex employers!)

If I can't claim it back till the next tax year, I can get my tax code changed (if that's even possible) before May as I will be technically unemployed come May 16th and really don't want everything to be taxed!

I am totally confused after reading the HMR website so any advice would be great! I know this is not your normal run of the mill case!

Cheers

Sam

chrisbur

You can claim a tax rebate after four weeks and every four weeks as long as it lasts with the following.......

http://www.hmrc.gov.uk/pdfs/p50.pdf

SamN

ooo brilliant thank you for that! :T

Can I just check something with whoever wants to reply

I have worked out roughly how much tax I will have paid after my last pay slip ( this figure is including what will be taken as tax from my lump sum SMP)

I will have only paid via PAYE ~3K in tax during April and May. As I will have no other income to be taxed, would I get all of that 3K back? I wont be going over my tax allowance for this tax year even once I get a job which started at the end of Feb 2012!

Hope that make sense!

chrisbur

To give an acurate reply would need to know tax code and full gross and tax paid details.
If I read your post correctly you will have paid £3000 in tax in April and May, this gives a taxable income of £15000 plus your tax allowance for these months means that your earnings for this year are already well over the usual tax allowance figure.

EDIT Actually a bit less than £15000 as some tax will be deducted at a higher rate but still seems to me will be over the allowance.

SamN

Ok I think this is where is gets a bit tricky!

I am on 30K a year so 2.5K gross a month. My tax code is 674L

Will have completed 1 month on full pay (april) and 2 weeks on full pay in May.

In my may pay slip I will also be getting the lump sum SMP which I believe will be ~7.6K gross so about 5.7K after tax.

I wont be earning any other money after the may payslip so I will not be paying any further tax.... argh... I hate trying to sort this out! I do numbers but I hate all the red tape

chrisbur

SamN wrote: »

Ok I think this is where is gets a bit tricky!

I am on 30K a year so 2.5K gross a month. My tax code is 674L

Will have completed 1 month on full pay (april) and 2 weeks on full pay in May.

In my may pay slip I will also be getting the lump sum SMP which I believe will be ~7.6K gross so about 5.7K after tax.

I wont be earning any other money after the may payslip so I will not be paying any further tax.... argh... I hate trying to sort this out! I do numbers but I hate all the red tape

I assume 674L is last year's code so this year 747L or £7475 before tax due.
Say 1.5 months at 2500 = 3750
plus SMP 7600 brings us to £11350

11350 less 7475 is 3875 tax due on that £775

Assuming no other taxable income for the year then any tax paid over this would be due back by the year end.

Figures are very rough and there have been some estimates so bear in mind the actual tax result will be a bit different.

SamN

Thank again for taking the time to help me with this

So how does it work if I am on PAYE? I am assuming that the Tax office is assuming I will be in work for the whole tax year and will tax accordingly.

Sorry if I am asking really Muppet type questions!

chrisbur

If we assume a tax code of 747L then each week you are allowed just under £144 before tax is due. If you have no taxable income for a week then your tax free allowance goes up by this amount and you get back as a refund the tax you paid on it. If you are paying tax at 20% then you are due back 20% of the just under £144 which is about £28.75. This goes on for every week untill you have some taxable income, you run out of tax to be rebated or the tax year ends. If you have paid any tax at a higher rate the same principle applies but the rebate is a bit higher untill the higher tax runs out.

jimmo

If we take Chrisbur's figure of £11,350 in May (Month2), the Tax tables will effectively assume that you are on an annual salary of £68,100. The way the Tax Tables work is to give you one twelfth of your Personal allowance(7475) each month and one twelfth of your basic rate band (35,000). Then anything above that is charged at higher rate, 40%.
As May is month 2 you will have
Gross earnings £11,350
Personal allowance (2/12 *7475) £1,245
Chargeable to tax (11350 - 1245) £10,105
Basic rate tax on (2/12* 35000) £5,833
Higher rate tax on (10105 -5833) £4,272.
Total tax due (for April and May)
5833 @ 20% = £1,166.60
4272 @ 40% = £1,708.80.
Total = £2,875.40.
When you make your first 4-weekly unemployment repayment claim HMRC will calculate by reference to Tax Weeks rather than Tax months.
Assuming you make your claim towards the end of June that will probably be Week 12 or 13.
Then, following the same principles, if we assume week 13, you will have
Gross earnings £11,350
Personal allowance (13/52 * 7475) £1,868
Chargeable to tax (11350 - 1868) £9,482.
Basic rate tax on (13/52 * 35000) £8,750.
Higher rate tax on (9482 - 8750) £732.
Total tax due (for April to June)
8750 @20% = £1,750.00.
732 @ 40% = £292.80.
Total £2,042.80.
Repayment due (2875.40 - 2042.80) £832.60.
Can you take it from there?