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Original poster

One of those situations where everyone keeps passing me on - does anybody know what I should do?

45 replies

Babymeanswashing · 22/05/2021 06:37

My maternity pay (SMP) was awarded to me in one lump sum.

As a result there were loads of deductions which wouldn’t have happened if it had been paid monthly. Some tax but also pension, student loan, NI, etc.

As a result I’ve lost out on around £3500. I don’t know how or if I can get this back - does anyone know what I should do?

OP posts:
Original poster
Babymeanswashing · 22/05/2021 08:56

I’m returning to a different job, puddleduck Smile

Thanks avocado, that’s what I’m hoping!

OP posts:
Original poster
Babymeanswashing · 22/05/2021 08:57

I don’t know clash, I doubt it somehow Sad

OP posts:
MrsJackRackham · 22/05/2021 08:58

I think, as you said you're not returning, your employer has treated you as a leaver and paid SMP in a lump to get you off the payroll. They have the option of keeping you on to pay the SMP weekly/monthly but no P45 can be issued. Did you ask for your P45?
I'm surprised they were happy to pay in lump as they will pay more in employer's NI.
They can correct your year to date figures by sending in an amended FPS (form submitted to HMRC with pay etc) but that's their decision.

Interested in this thread?

Then you might like threads about this subject:

General money
thereinmadnesslies · 22/05/2021 09:05

www.moneysavingexpert.com/students/student-loan-overpayment-refund/
This suggests you can get a refund on overpaid SL

MrsJackRackham · 22/05/2021 09:12

The problem is you haven't overpaid, all the calculations and deductions (apart from tax) are made on a point of payment basis. Depending on the tax month you were paid in you might get a tax refund.

Original poster
Babymeanswashing · 22/05/2021 09:36

Yes but on an annual basis I have mrsjack

Thanks therein I really hope so!

OP posts:
puddleduck234 · 22/05/2021 09:37

@Babymeanswashing

I’m returning to a different job, puddleduck Smile

Thanks avocado, that’s what I’m hoping!

So is that new job set in stone? I'm going on a lot of assumptions here as well obviously - but if your paying back student loans does this mean your earning over 27k in a normal year? Are you going to earn over that this tax year? (with the new job) if so then you would be expected to pay the tax, the NI, the pension, loan etc. As SMP is classed as income.

It's really shitty that they paid it as a lump sum, and I can completely sympathise with it being a shock to the system if you wasn't expecting it. You need to work out how much you should have paid (if anything) over the tax year to see if it's correct or not.

Also checking your tax code is a good start, in the past I was marked as a high earner (somehow the tax man thought i was going to earn over 90k I bloody wish!)

TakeYourFinalPosition · 22/05/2021 09:41

My friend had this a few years ago. She wasn’t returning to her job so rather than keep her employed and pay monthly, they paid the lot. She got the tax back but nothing from student loans as she didn’t earn under the threshold for the year, and nothing from her pension. She spent weeks chasing everyone, it was so stressful for her...

I hope it’s changed and you can get more back, it’s a horrible shock from something that most people don’t seem to have much control over.

Original poster
Babymeanswashing · 22/05/2021 09:43

puddle but I don’t think that is quite correct, because if I received £600 a month as SMP, which I should have, I wouldn’t be taxed or pay back a SL or pension etc.

I really hope I can get it back though. My last job didn’t pay as well as the one I am starting in September so I don’t know if that makes a difference.

OP posts:
MrsJackRackham · 22/05/2021 09:43

NI and SL deductions are calculated on point of payment not yearly like tax. It's crap that they've done it that way but I don't want you to get your hopes up about getting money back.

When did you receive the lump sum?

Original poster
Babymeanswashing · 22/05/2021 09:49

Right I see Sad it was on NYE, actually.

OP posts:
Rose5678 · 22/05/2021 09:52

Yes you can claim back student loans - I got £500 back after a year on maternity. Sorry I don’t have the details to hand right now but just want to let you know you can!

Original poster
Babymeanswashing · 22/05/2021 09:54

You are a bearer of good news!

OP posts:
puddleduck234 · 22/05/2021 09:56

@Babymeanswashing

puddle but I don’t think that is quite correct, because if I received £600 a month as SMP, which I should have, I wouldn’t be taxed or pay back a SL or pension etc.

I really hope I can get it back though. My last job didn’t pay as well as the one I am starting in September so I don’t know if that makes a difference.

So £600 from April to September (£3600)? October to April at 27k a year (£15750) Total before tax £19350 (again this is all assumptions as I don't know your earnings)

So tax and NI would need to be paid. Pensions in theory your could have opted out before maternity, but you haven't so that's also paid.

Student loans to be honest I've never had to pay one back so I'm not in the best position to start on that one. But my understanding is over 27k a year so you won't earn that this tax year.

You're right I could be talking out my backside but that's how I understand the situation. Happy to be corrected and be told I'm wrong

MrsJackRackham · 22/05/2021 10:02

So mth 9, you'll have 3 mths if unused tax free allowance to off set against tax already paid. Register for your personal tax account on gov.uk and claim your tax refund.
NI and SL deductions are calculated in the week or month the pay in received, doesn't matter what you've been paid or will be paid, it's a isolated calculation.

MrsJackRackham · 22/05/2021 10:06

Sorry, pressed send too soon. If you're monthly paid then the monthly threshold will be used (amount you can earn before NI and SL deductions are made) This won't be adjusted at year end to account for the annual thresholds, it's a point of payment calculation, not cumulative.

Original poster
Babymeanswashing · 22/05/2021 10:06

It’s very confusing but I know colleagues on identical amounts aren’t paying tax, NI, etc.

My total should have been £7548.58 and it was 4638. So a loss of nearly £3000.

OP posts:
Original poster
Babymeanswashing · 22/05/2021 10:07

I’m so sorry mrsjack could you explain that to me again? I’m really not brilliant with this as you can probably tell! Sorry - you got stuck with the class dunce here!

OP posts:
MrsJackRackham · 22/05/2021 10:33

of course.
Tax and NI are different pieces of legislation so calculations on pay are treated differently, SL follows NI legislation.
Tax- you get a yearly threshold before you pay tax, this is divided into equal chunks based on your pay period. Any unused chunk gets carried over and can be offset against your next pay. So you had no earnings in mth10, 11 & 12 therefore you have 3 chunks still to be used. pay and tax are added up at the year end and recalculated based on the yearly tax free allowance.
NI doesn't work like that. Each pay is treated separately so it doesn't matter if at the year end your total pay for the year is well below the yearly threshold for deductions. If you earned enough, even in only one month, that deduction will still stand. It's not a grand total for the year. Each pay day is looked at in isolation.
I have found this though....
www.gov.uk/repaying-your-student-loan/getting-a-refund
If your annual income was below the threshold
You can ask for a refund if you made repayments but your income over the whole tax year (6 April to 5 April the following year) was less than:

£19,895 a year for Plan 1
£27,295 a year for Plan 2
£25,000 a year for Plan 4
£21,000 a year for Postgraduate Loan

Original poster
Babymeanswashing · 22/05/2021 10:37

Thank you so much.

I really appreciate the time you took to help me there.

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