Made redundant after going on maternity leave. Advice needed please!

Alfie05_2

Hi All,

I am very new to this and am hoping that someone may have been unlucky enough to have been in the same position as me!

I am going on maternity leave on 30th March of which I wish to take the 39 weeks paid maternity (planning on going back to work in January 2013).

I have now been informed that my department is relocating, therefore I am to be made redundant approx May/June (just a couple of months of starting my maternity leave).

My employer has said that they can keep paying my maternity monthly or I can have this in a lump sum and be given my P45 allowing me to be prepared to look for work at the end of the year, however they have pointed out that giving it to me in a lump sum I may be taxed on it as it obviously quite a large payment (approx £4,000).

My question is:
1. If so, am I able to claim this tax back, and if so will I have to wait until the end of the tax year (April 2013?)

I am just concerned that I really need to budget whilst being on maternity leave and could do with being as prepared as possible!

I have tried ringing the tax office, but to be honest they were not very helpful!

Thanks to anyone that may be able to give me some advice

wadewadewade

Unless maternity pay is taxed differently to standard pay (I genuinely don't know, it might be) then, if your pay is higher in a month, you will be taxed on that and you won't be able to claim it back until the next April.

I do vaguely remember a way you could claim it back earlier if you could prove (somehow) you wouldn't work again for the tax year but this may have been students only.

Uncertain

Generally speaking you pay tax on anything that is a contractual entitlement but not on any compensation for the loss of your employment (up to £30K).

getmore4less

P50 may apply, you won't be working or claiming JSA.

I though I posted allready on thsi.

Watch out for service clocking up another year to get more redundancy and notice pay if they don't pay as lump sum.


What is the chance there is a suitable job in the company somewhere.

Alibali

Hi,

I am in a very similar situation - due to go on mat leave 16th March, my contract ends end of March. My employer was looking to pay my mat pay in one lump sum, however, I contested this, the reason being that to reclaim the tax you must complete a P50, according to the tax office when completing this you sign a declaration stating that you wont work for the rest of the tax year - otherwise, if you do you would have to repay the tax back. Also, I dont know what maternity pay you will get before redundancy, but if your employer gives you enhanced pay, this along with the lump sum may take you over your tax free allowance for the year, meaning that you will not be able to reclaim the tax paid - The tax office confirmed that they would not treat the lump sum payment any differently - as far as they are concerned if its paid in one month you are due to pay tax regardless. Also you would pay way more NI on the lump sum that you would do getting statutory mat pay weekly or monthly.

Your better off financially if you get the payments paid weekly or monthly, that way you dont have to worry about trying to reclaim tax etc.

antrobus

Alibali wrote: »

... Also you would pay way more NI on the lump sum that you would do getting statutory mat pay weekly or monthly...

It's the other way around. You're more likely to pay less NIC on a lump sum than you would on installments.

lolly_896

Going to throw another spanner in the works?

Would you be entitled to tax credits, if your unemployed it will be just child tax where as if your employed although still on maternity you would be entitled to working tax credits too