Redundancy while pregnant: SMP paid in a lump sum, carers' allowance, tax & funded childcare hours

I have a complex set of overlapping questions about redundancy during pregnancy, SMP and benefits, which I have not been able to find an answer to myself. 

Here are the details: 

I’m being made redundant at the end of this month, my final working day is 31st Jan. 

I’m entitled to SMP but it will be paid in a lump sum on 1st March along with enhanced mat pay and PILON of 12 weeks notice. 

My due date is late April (third child). 

I won’t be returning to the workforce full time but instead will be caring for my son who receives the higher care element of DLA so want to claim Carer’s Allowance. 

- Both my children attend nursery part-time – the eldest (who receives DLA) is currently entitled to 30 funded hours and my current youngest will be entitled to 15 funded hours from September. They are also both currently entitled to a tax-free childcare account – all because my husband and I both work. 

I have 2 main concerns: 

Due to being paid SMP in one lump sum I worry I will be seen as being employed for the following 39 weeks and unable to claim carers allowance for this period, but at the same time will lose my children’s funded childcare hours and tax-free account because I am seen as unemployed – surely I cannot be counted as employed by one department and unemployed by another at the same time? Also, if I’m seen as ‘employed’ still, would I have to pay back my SMP should I start a new part-time job prior to the end of the 39 weeks? 

Had I not been made redundant, my mat leave would have been starting in the 2024/25 tax year and so I would’ve only paid tax on £300 of my SMP/enhanced company mat pay, but because the company is paying me the same amount but in a lump sum in the 23/24 tax year I will be taxed on all of it and end up taking home approx. £3,000 less than I would’ve done. Can I claim any tax back or legally request my company changes the payment date of my final payment so that it falls after April 5th? 

If I am unable to neither work part-time, claim Carer’s Allowance nor receive funded childcare for 39 weeks I will end up bankrupt. I am losing sleep over it, and taking my two older children out of nursery would be detrimental to their wellbeing – especially my eldest who is disabled and due to start school in September. 

If anyone could provide clarity to my situation (am I employed or unemployed for that SMP period?) and suggest next steps (i.e. should I refuse the SMP payment so that I can claim Carer’s Allowance/seek part-time employment sooner?) it would be much appreciated.

Thanks all.

Comments

  • marcia_
    marcia_ Posts: 1,467
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    cxc100 said:

    I have a complex set of overlapping questions about redundancy during pregnancy, SMP and benefits, which I have not been able to find an answer to myself. 

    Here are the details: 

    - I’m being made redundant at the end of this month, my final working day is 31st Jan. 

    - I’m entitled to SMP but it will be paid in a lump sum on 1st March along with enhanced mat pay and PILON of 12 weeks notice. 

    - My due date is late April (third child). 

    - I won’t be returning to the workforce full time but instead will be caring for my son who receives the higher care element of DLA so want to claim Carer’s Allowance. 

    - Both my children attend nursery part-time – the eldest (who receives DLA) is currently entitled to 30 funded hours and my current youngest will be entitled to 15 funded hours from September. They are also both currently entitled to a tax-free childcare account – all because my husband and I both work. 

    I have 2 main concerns: 

    - Due to being paid SMP in one lump sum I worry I will be seen as being employed for the following 39 weeks and unable to claim carers allowance for this period, but at the same time will lose my children’s funded childcare hours and tax-free account because I am seen as unemployed – surely I cannot be counted as employed by one department and unemployed by another at the same time? Also, if I’m seen as ‘employed’ still, would I have to pay back my SMP should I start a new part-time job prior to the end of the 39 weeks? 

    - Had I not been made redundant, my mat leave would have been starting in the 2024/25 tax year and so I would’ve only paid tax on £300 of my SMP/enhanced company mat pay, but because the company is paying me the same amount but in a lump sum in the 23/24 tax year I will be taxed on all of it and end up taking home approx. £3,000 less than I would’ve done. Can I claim any tax back or legally request my company changes the payment date of my final payment so that it falls after April 5th? 

    If I am unable to neither work part-time, claim Carer’s Allowance nor receive funded childcare for 39 weeks I will end up bankrupt. I am losing sleep over it, and taking my two older children out of nursery would be detrimental to their wellbeing – especially my eldest who is disabled and due to start school in September. 

    If anyone could provide clarity to my situation (am I employed or unemployed for that SMP period?) and suggest next steps (i.e. should I refuse the SMP payment so that I can claim Carer’s Allowance/seek part-time employment sooner?) it would be much appreciated.

    Thanks all.
     You will not be employed nor receiving a wage after your redundancy and notice is paid so should be able to claim carers allowance 
  • amanda1024
    amanda1024 Posts: 211
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    Once the payment has come through, you'll no longer be over the weekly earnings limit for carer's allowance so will be able to claim it. I think - although please look into this yourself - that if your husband will still be working and you'll be in receipt of carer's allowance, you'll still be entitled to tax-free childcare. There might be a month or so gap though, when you're not employed but can't claim carer's allowance because your five-week income will be too high.

    You can request that the final payment is in the next tax year, but I don't believe there's any obligation on the part of the employer. There are the usual options to minimise your tax bill for this year - pensions etc.

    Depending on your husband's income, you might be eligible for other benefits too - worth looking into if you're worried about money.
  • chrisbur
    chrisbur Posts: 4,012
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    cxc100 said:

    - Had I not been made redundant, my mat leave would have been starting in the 2024/25 tax year and so I would’ve only paid tax on £300 of my SMP/enhanced company mat pay, but because the company is paying me the same amount but in a lump sum in the 23/24 tax year I will be taxed on all of it and end up taking home approx. £3,000 less than I would’ve done. 

    Your employer is permitted to pay your SMP as a lump sum but if you would prefer it as a regular payment when due under normal circumstances might be worth mentioning to your employer that they will pay more employers NI by paying it as a lump sum.
  • penners324
    penners324 Posts: 2,570
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    We're you there more than 2 years? You'd be entitled to redundancy pay on full salary as well.

    You are also entitled to unused or unpaid holiday 
  • sheramber
    sheramber Posts: 18,605
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    https://www.gov.uk/tax-free-childcare#content

    Eligibility

    Your eligibility depends on:

    • whether you’re working (employed, self-employed, or a director)
    • your income (and your partner’s income, if you have one)
    • your child’s age and circumstances
    • your immigration status

    If you’re working

    You can usually get Tax-Free Childcare if you (and your partner, if you have one) are:

    • in work
    • on sick leave or annual leave
    • on shared parental, maternity, paternity or adoption leave and you’re going back to work within 31 days of the date you first applied

    If you’re not currently working

    You may still be eligible if your partner is working and you get any of the following:

    • Incapacity Benefit
    • Severe Disablement Allowance
    • Carer’s Allowance or (in Scotland only) Carer Support Payment
    • contribution-based Employment and Support Allowance

    You can apply if you’re starting or re-starting work within the next 31 days.

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