Maternity and Tax

flippityflop

Hi all

I have posted this over on the Benefits and Tax Credits section but haven't managed to get the right answer yet, I don't think.....

I was wondering if anyone can help me work out what my take home pay would be when I go on maternity leave.

My salary is £30K and all being well the baby is due 28 December 2011.

My company pays 90% for 6 weeks and then 33 weeks SMP. I have managed to find out what the schedule for payments would be using the HMRC website, but I just don't know how I work out what I'm actually going to be taking home.

I will also have student loan taken out of this.

I've only had one payday this tax year, so my totals to date are as follows:
Tax: 375.20
NI: 227.76

Please could someone help me? Many thanks in advance

iamana1ias

What's your tax code? What percentage of your earnings do you pay for student loan?

flippityflop

Tax code is 647L and I pay £112 a month on £2500 gross for my student loan, so 4.48% (have no idea if that's right!) My loan is post-1998.

CLAPTON

Maybe check your tax code ; it's likely to be 7475L

at the moment you get 2,500 gross per month
then you pay 9% student loan on anything over 1250 pm i.e 9% of (2,500 - 1250) = 112 pm
your tax will be (2,500 - 74745/12 ) x 20% ie 1877 x 20% = 375 pm
and NI of 12% of (2,500 -602) = 12% x 1,898 = 227 pm


to work out the tax, NI and student loan for the period you get 90% of salary you can do the same calculation but with a lower salary

when on SMP you will be owed a small tax rebate of about 3 or 4 per week (and pay no NI or student loan payments)

flippityflop

Thanks so much Clapton. You're right about my tax code, I was looking at last year's payslip at first!

Friends of mine have told me they get tax, NI and student loan taken out of their maternity pay. Do you think this is probably because they are on a higher salary than me?

ceeforcat

They wouldn't or shouldn't pay any of those deductions if only receiving SMP - i.e. after the first six weeks.

CLAPTON

well
I'm not very knowledgeable abiut maternity pay but

you will get deductions from maternity pay (i.e. when you get 90% of normal pay) and will be taxed as per my example above except for a lower starting point
but SMP is only £128 per week so below the threshold for tax, NI or student loan

ceeforcat

Exactly Clapton. I do know about SMP however. Your rate will be, for the first six weeks, 90% of your average pay in the eight weeks prior to the 15th week before the baby is due (not actually born). No doubt someone got a prize for coming up with that method.

flippityflop

But does it matter that you have already earnt over the threshold in that tax year?

ceeforcat

No. NIC is calculated on a week by week basis with no account taken of previous income or deductions. PAYE is averaged out over the year. Your income will be averaging down as your income drops and, as Clapton says, you will get a few quid refund every pay day.

flippityflop

Thank you so much for your help ceeforcat and Clapton, you have really put my mind at ease!