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Statutory maternity pay in lump sum

(8 Posts)
Prometheus Fri 21-Nov-14 21:59:42

My sister is due to give birth in March 2015. She has been on a 1 year contract which has ended this week and which will not be renewed. As she meets all the criteria she is eligible for statutory maternity pay.

However her employers have said they have to pay her in one lump sum next month as she will no longer be employed by them. She is panicked as it means she will have to pay full tax and NI on it under this tax year. Her financial planning was that she would be paid weekly into the 2015-16 tax year and would be able to clam tax back as her earnings for that year would be well below the tax threshold (her SMP is a lump sum of about £6,000).

She is gutted. Is there anything at all she can do please?

Yambabe Fri 21-Nov-14 22:28:17

She doesn't actually meet the criteria though, to qualify for SMP she would need to still be employed in the 15th week before her expected date.

Her employer should be giving her an SMP1 form so she can claim Maternity Allowance.

She needs to go back and speak to payroll/HR again.

Karoleann Fri 21-Nov-14 22:29:04

Yes that does sound correct.

The company would not be able to pay weekly/monthly as then they would still be employing your sister and would be liable for holiday pay.

Prometheus Sat 22-Nov-14 07:50:39

Thanks for the advice. I think she meets the criteria by a week or so. Annoying that she can't do anything. She's going to lose over a thousand pounds in tax and NI sad

TinyWishes Sun 23-Nov-14 22:08:17

Would she not of lost it anyway. Weekly or lump sum? (Sorry if I am being thick) x

Prometheus Tue 25-Nov-14 20:26:10

No because she won't be working next tax year (from April 2015) when she would have received the majority of the weekly SMP. So at the end of the year she could have claimed all the tax back as she would be under the threshold. As she has worked full time this year she is over the tax threshold so will be pay full tax on the lump sun sad

fuckwitteryhasform Wed 26-Nov-14 00:25:51

Could she choose not to receive it and get maternity allowance instead? Maybe speak to HMRC as they deem it as "earned income" for the following year? Perhaps the company could pay her on 5 April if she's only going on mat leave in March?

Stevie77 Wed 26-Nov-14 11:28:37

They can pay her monthly without her being an employee (my "lovely" former employer did just that) but she would pay tax on it, which she could later claim back. It would mean some administrative faffing on their side but they would be able to claim their NI back that way too.

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