Is Statutory Maternity Pay taxed?

sterl1ng

I don't think you get much so I'm surprised if it is!

shoe*diva79

It is taxable but the amount is under the threshold.

sterl1ng

So does that mean I pay nothing on that - on NI too? I just calculated mine to get rough idea and its £138.18 a week.

millysg1

I have been wondering this myself as I go on ML in March and I think it is a yes but I hope to get a rebate at the end of the year.

As I am on full pay for April - July, that will take me over the yearly tax limit so for the following 4 months of SMP, I think I will get taxed but I have no idea how much and how they will work out my years earnings and how much I owe. Therefore, I expect I will be over taxed and get a rebate at some point.

So, to sum up, I have no idea how much SMP I will get and will just have to wait and see.

Pepperoni

Its under the threshold so you will clear the amount monthly. However, whether you then have to pay some tax when you're annual earnings are worked out (if not taking a full year) I'm yet to find out!

AngelOfTheNorth

It is taxable if you're over the threshold, but that doesn't mean it will be taxed in your next pay packets. It depends what you earn.

Savvy_Sue

It is taxable, so it is added to your other taxable income for the year, and as it is paid with your salary it falls under PAYE.

What tends to happen is that the first time your employer pays you less than your regular monthly salary, you get a tax rebate. You may well get one for the first few months that you are on maternity leave.

If you are on maternity leave at the start of the tax year, you're less likely to get a tax rebate, but you won't pay any more in tax overall than if you'd been on full salary for a month or two and then started maternity leave.

rpc

If you have a cumulative tax code (you aren't on Month 1 basis) then you will probably get a tax refund for a while. Each month you have some of the allowance allocated and if you don't use it all then you get a tax rebate until you have paid the correct tax for the year so far.

This means that you don't need a rebate at the end of the year and it is the way that most PAYE earners get taxed. It also means that, for example, you don't underpay your tax if you get a payrise.


[NB - this is a fairly crude simplification]