salary sacrifice and maternity pay

[dodi1978]

Hi!

I am currently trying to conceive baby no 2 and am trying to think ahead about how to fund maternity leave.
My employer pays 8 weeks full pay, then 16 weeks half pay and SMP on top, then just SPM. I am unlikely to be able to afford more than 8 months out, so will have a few weeks just on SMP.
DS 1 attends my workplace nursery. Luckily, I am able to salary sacrifice the full fees, which saves me a good £300 pounds a month due to tax / NI savings. So no childcare vouchers, but full salary sacrifice.
What would happen to that salary sacrifice during maternity leave, as I would like DS to stay at nursery. I guess that, during the 8 weeks of full pay and the 16 weeks of half pay plus SMP I will still be able to salary sacrifice. But during the weeks of SMP only? Would this be counted as a non-cash benefit just like childcare vouchers?
I know I should ask HR, but word would soon go around that I am thinking about a second maternity leave, so I am not keen to ask them.

It really depends on your company policy. Legally you can't make any deductions from SMP and I know my company cover the cost whilst your in SMP, but some may claim this back once your back at work. Do you have an annual selection window I. Which you chose you sacrifices?

If it is an HMRC compliant salary sacrifice scheme, then they have to treat the nursery place as a non-cash benefit, which means that they still have to provide it even if you have no salary to sacrifice.

Lougle is correct, although my understanding is that it is sed discrimination laws that require non-cash benefits to continue to be provided, even when there is no salary to sacrifice. This includes any pension scheme contributions paid by sal sac.

Thanks everyone! Yes, I am sort of hoping that it is considered a non-cash benefit... I also just realised that I may be able to discretely ask a colleague who was on mat leave for more than six months recently and also has a child at nursery.
Hoping for the best :--))!

My work have taken over paying for my childcare vouchers for the part of maternity leave where I'm on SMP (but not for the first part where I was still in full pay). So essentially £124 a month additional pay, albeit pay I can only spend on childcare.

Make sure that you understand what "full pay" and "half pay" means. It would be possible for "full pay" to be based on the same calculation as SMP (i.e. your post-sacrifice pay), and then the cost of childcare to be paid out of what remains - effectively meaning you'd be paying twice. If that is the case, you might be better off opting out, paying the tax, but getting a higher rate of maternity pay.

(For most people, they are better staying in, especially if they have a long time on SMP. But that's not necessarily the case if there are only a few weeks of SMP.)

Just one thing to add. I was on a very similar package (is it the TEDS scheme that you use?). You need to check the terms of your scheme and do your maths thoroughly.

In my firm, the "catch" of being able to use a salary sacrifice scheme to pay all of the fees was that my salary for benefits such as maternity pay / redundancy pay etc was based on my post sacrifice salary. So for arguments sake, my salary was £30k, my nursery fees were £10k a year so my pay for maternity pay was classed as £20k per year.

So for me, it paid to come out of the scheme shortly after becoming pregnant so that my salary went back up to the "normal" (full) rate for the purposes of my maternity pay and my H joined the voucher scheme at his firm so that we still got some tax saving. Although it cost us more in nursery payments for that period, it would have actually cost me more if my maternity pay had been based on my post sacrifice salary than my pre sacrifice salary if that makes sense.

Thanks everybody - that's all such useful advice. Mandy214 - this is a scenario I haven't even thought about.

I have now e-mailed payroll for clarification - what the heck, just need to know how much I need to save!

I also got caught out very slightly by the timescales - knew I wanted to leave the scheme for financial reasons - can't remember the exact dates for the definition of qualifying pay for maternity leave, its something like an 8 week period before the 15th week before your due date - someone will know better than me - but its relatively early in the pregnancy anyway. My firm also paid monthly. Can't remember the precise details but my firm needed notice of my intention to come out of the scheme well before they processed salaries (so say 2 weeks before I was actually paid), which brought the date they needed to know forward even more. Long story short, if you do come out of the scheme to maximise your maternity pay just check the dates very carefully.