Maternity pay lump sum and tax - confused - any very clever people out there?!?

[sarahpip]

Comnsidering getting my holiday paid in lump sum at some point in my maternity leave, which will mean a one off gross payment.

If I add this payment to my 2012/13 tax year pay, it will not take me over the 20% barrier cumulatively, however I wondered if it is worked out if it will be subject to some form of emergency tax/ 40% tax as gross it will be a payment of about 3k over and above my normal salary?

If it is, I will ask for it to be spread out.

I know the tax office is the best person to ask, but have you ever tried getting them on the telephone?!?! Was on hold for about 20 mins at lunchtime and had to give up!!

Thanks in advance.

Sarah, I don't see how it could be a gross payment?

But I don't believe a one off payment would automatically trigger a change of tax code to HRT, especially if you weren't cumulatively in that bracket when the one off payment was made. It would be like a bonus in its "appearance", I think.

Doesn't matter if you get paid all your salary in one hit or spread over the whole year, the eventual tax bill is going to be the same. There shouldn't be any emergency coding or special rate applied to the extra cash.

Thanks for the feedback.
Yes I see what you mean ref gross, i dont think i meant that - i meant lump sum! But your advice is helpful as was getting myself in a flap but makes sense for it to be taxed cumulatively.
Feel like a dunce for asking - need to do some futher reading on these issues!!

If you really want to learn more about tax issues there's an excellent book comes out each year called the 'Daily Mail Tax Guide' Don't let the DM reference put you off.

Depending on the amounts, if you are paid a lump sum part way through the tax year, you may be pushed into the next tax bracket for that month. Then (assuming you are still on the payroll eg receiving SMP) you would get a refund/reduced tax bill the next month and the next month etc until back to the correct

Are you sure you can get holiday pay paid out? Usually you have to take the holidays at the start or the end of your maternity leave, or if you decide not to return you get a payment.

However... Be aware that NI is not cumulative unless you're a director. So roughly, if you get £107 as your weekly salary for 52 weeks you have no NI to pay. If you get £5,000 in one go you pay NI on everything except the first £107 (if that's what the limit was). So it depends on whether you're using up the NI-free amount every week/month. If you're getting SMP this should cover the NI-free amount so the lump sum would get 12% regardless. If you're planning to draw it after SMP has run out it may make more sense to not draw it in a lump sum.

As said before - rules for directors NI are different.