How much of maternity weekly pay counts as income (for tax credits)

cm00

Darksparkle wrote: »

You are making this more complicated than it needs to be. Take a step back and start again.

You add up everything you receive from your employer. That's wages, holiday pay, SMP etc. We'll call that figure A.

Then work out how many weeks in the tax year you'll be on SMP (max 39 weeks). Times this by £100. That's figure B.

Then it's simply Figure A minus Figure B.


Or. . . . . .

Add up everything you receive from your employer - wages, holiday pay etc but only include £40 per week of the SMP.

The figures are exactly the same.

So an example.

I earn £1000 per month. I work for 3 months so earn £3,000. I then have 9 months SMP so £5,460 so in total £8,460.

I can then deduct £3,900 from my income leaving me with income to declare of £4,560.

Or. . .

I earn £1000 per month. I work for 3 months so earn £3,000. I then have 9 months SMP but only include the £40 each week so £1,560. The total income is still £4,560.

Ok that all makes sense. So i'm correct in my thinking then that when I contact the tax credit office to let them know I now have a 2nd baby and maternity has started, that I should inform them that my job salary for this will be just £3000 (instead the usual £13000). So, £3000 is what I should report as my official job income for that year? As that's all I shall receive. Then I add any other necessary income such as the £1560 for 39 weeks of maternity pay.

I just want to make sure I am doing this correctly by telling them that my salary for that year will reduced from 13k to 3k because I won't be working for 9 months.

Darksparkle

You don't need to give the figures separately. They are still earnings from employment so just go in the one box. The calculator just lists it separately so you don't need to deduct it yourself.

So you'd just tell them £4,560

cm00

I'm doing the tax credits calculator now and it actually does say the first £100 per week from maternity is what counts as income.

If your payments are more than £100 a week, enter £100 in the box for each week. For example, if you got them for 30 weeks, enter £3,000.



This means I have to enter £3900 as maternity payments for 39 weeks of maternity. This is significantly higher than the amounts i've seen others say to put on here and other forums. But the government calculator is quite clear about this, so i'm not sure what to do.

Edit, the calculator seems to deduct this amount from my total yearly income.

cm00

I'm still confused over this. Here's what I am doing.

I enter 3 months worth of salary into the tax credits calculator (it's above 3500, i just entered £4000)

I enter £3900 into the maternity pay box (39 weeks at £100 per week, it tells you to do this).

I specify that we have two children, and then i enter £12200 as my partners gross income.

The calculator then decides that our gross household income is £12000, as a result the tax credit payment is quite high.

Is there anything I am doing wrong? Do I need to add the £40 per week for 39 weeks from the maternity to my total salary? I put £4000, should I have put £4000 + £1560 = £5560 as my salary?

I'm confused as to why the government tax credit calculator is deciding that our gross income of £16,000 is somehow only £12000 (something to do with the £3900 maternity i am sure). How is receiving income from maternity reducing our gross yearly income from £16000 to £12000?

Maybe I am supposed to include the full amount of maternity pay into my total income field at the beginning? And then the calculator uses the £100 * number of weeks on maternity figure to subtract the £3900 from that? Is that why my total household income somehow drops from 16k to 12k, because I should have added the £140 * 39 to my salary figure at the beginning of the calculator?

Darksparkle

As I said above, you need to include SMP in your earnings. You haven't done this, you have only included your wage for the period you are working.

It asks for total earnings. This is everything from your employer, wages, holidays, SMP etc.

You cannot exclude the SMP from your total earnings and ask for it to be deducted later in the calculation because you've never included it in the first place.

Tolly_T

If you click "What are employment earnings?" on the calculator, under the box for employed, total earnings box you'll see

Enter your total earnings from all jobs. You can check your payslips, or your P45 or P60 from last year to help you work out the figure.

Include any Statutory Maternity, Paternity or Adoption pay.

which is what Darksparkle told you to do.

The calculator doesn't say it's going to add the Statutory Maternity figure on to the first figure you gave for total earnings. It is asking for this figure in order to deduct it which is why it says to only include the first £100 pounds.

bspm

cm00 wrote: »

I'm still confused over this. Here's what I am doing.

I enter 3 months worth of salary into the tax credits calculator (it's above 3500, i just entered £4000)

I enter £3900 into the maternity pay box (39 weeks at £100 per week, it tells you to do this).

I specify that we have two children, and then i enter £12200 as my partners gross income.

The calculator then decides that our gross household income is £12000, as a result the tax credit payment is quite high.

Is there anything I am doing wrong? Do I need to add the £40 per week for 39 weeks from the maternity to my total salary? I put £4000, should I have put £4000 + £1560 = £5560 as my salary?

I'm confused as to why the government tax credit calculator is deciding that our gross income of £16,000 is somehow only £12000 (something to do with the £3900 maternity i am sure). How is receiving income from maternity reducing our gross yearly income from £16000 to £12000?

Maybe I am supposed to include the full amount of maternity pay into my total income field at the beginning? And then the calculator uses the £100 * number of weeks on maternity figure to subtract the £3900 from that? Is that why my total household income somehow drops from 16k to 12k, because I should have added the £140 * 39 to my salary figure at the beginning of the calculator?

If you're employed, your total earnings from all your jobs before tax and National Insurance.
£ 7900

What are employment earnings?
Enter your total earnings from all jobs. You can check your payslips, or your P45 or P60 from last year to help you work out the figure.

Include any Statutory Maternity, Paternity or Adoption pay. ^^^^


Statutory Maternity, Paternity or Adoption Pay.
Only include the first £100 a week of any Statutory Maternity, Adoption or Paternity Pay
£ 3900

How to work this out
If your payments are more than £100 a week, enter £100 in the box for each week. For example, if you got them for 30 weeks, enter £3,000.

If your payments are less than £100 a week, enter the amount you got. For example, if you got £80 for 30 weeks, enter £2,400. Don't include Maternity Allowance.

I think? what you are doing is not entering the SMP in your total wages figure, you are thinking you have to enter it in the SMP box below.
I might be wrong but on reading the instructions from the Tax credit calculator I believe this is what you have to do.

cm00

Yep i've got it now. I didn't understand how the calculator worked at first, was confused about the part where you enter the £100 per week for maternity and how it uses that calculation. I see now that you must add the full total for maternity to your salary and then it will subtract £100 * number of weeks you're on maternity from that.

Another question. The majority of my income is from my rental property. So that 10 grand is having the largest effect on our tax credits amount. Should I include that 10 grand as income at the start of the maternity when changing our tax credits claim with the new details? Obviously I expect to get that 10 grand as my property is rented out. However, my tenants are on a rolling contract and could leave with just 30 days notice if they decided to. There's obviously other things that could effect my gross income too, like my tenants could decide to just stop paying (unlikely, but it happens).

So my 10k rental income isn't guaranteed, if I was to not get this money, it would mean I have well over estimated my earnings and we would have received far less in tax credit payments than we should have. What is the solution to this? If I report that we earn the 10 grand from rental income and then I don't get it, will they recalculate it so we receive all the tax credits that we should actually have received if I hadn't mentioned the 10 grand at the beginning, or do we lose out through this?