Maternity Pay Help

Tozom

Hello

We're trying to work out how much money my wife would get on maternity pay, so we can work out how much we need to save for us to have the same lifestyle while she is off for 9mths! (i.e work out the monthly difference from her current pay to what shes going to get!).

Gov website says this..

First 6 weeks £611.83
Next 33 weeks £136.78
Total 39 weeks (9mths) £8,184.72

Which is fine but now need to work out tax and nat insurance deductions.

Wife is in the 20% income tax bracket so would we just deduct 20% from that figure, or does any of the £9440 allowance she has come into that?

Also, national insurance deductions is 12% of her weekly earnings of over £147. But as most of the weekly earnings doesnt reach this figure, how is it calculated?

Sorry if in wrong forum but couldnt find right one.

Horseunderwater

A lot will depend on how much the total gross your wife earns before she goes on ML. But in essence when you know approximately how much her total gross up to Mat leave is - you can add that to the figure you gave above and that will give you the before and during total. When is she due to give birth or is this purely hypothetical at present? Are the 9 months all going to fall in this tax year that ends 5th April 2014? Once you know that then you can deduct the 9440 from these income figures and multiply that out by 20%. This will only be a rough guide simply because you have no way of knowing how much holiday pay is due or if she will go back to this job to get the more accurate total. However you do not need to worry about NI deductions as they simply do not happen when SMP is in place. And the weekly level for this year is £149 /week. I doubt if any tax will be taken as the weekly tax allowance is £181/week this year. So there may not be any tax due at all. So you may not need to put as much as you thought aside. Added to that you can deduct £100 week income from your future Child tax credit claim for 39 weeks which will reduce her income by £3.9k, which when added to yours may mean that you qualify for CTC and possibly WTC if your joint income will be less than £18k.

Tozom

thanks for the detailed response. not currently pregnant but planning. Had a false start already.

So, you're saying if I add her maternity income of £8184.72 to her standard income for the other 3 months of the year which would be £17022.21.

then deduct £9440 which comes to £7582.21, then we only get taxed 20% of that in that year? How can I break it down specifically to that 9mth period so we can work out a rough guide of monthly income?

Horseunderwater

If you wish to do that then divide the personal allowance up by 12 and multiply out by 9 that will give you 9 months PA and then deduct 9 months of Tax code from SMP total of figure you posted which works out around £1104 @20% is £220.95 tax That is for this year BTW. Next year PA is £10k - so figures would be £136.95 tax. Also SMP would be 1% more too - approx. £1.37 more per week.

Tozom

Excellent thankyou. So you think I should not bother working out the NI? Are contributions made on my wife's behalf?

xylophone

https://www.gov.uk/maternity-pay-leave/pay
http://www.dwp.gov.uk/publications/specialist-guides/technical-guidance/ni17a-a-guide-to-maternity/statutory-maternity-pay-smp/national-insurance-credits-while/
might be worth a look.

Tozom

Yeah I checked the .gov on. It does say "Tax and National Insurance will be deducted.", so thats why I was querying how to work out the NI deductions.