Maternity pay paid by government and tax

[babybel123]

My employer went into administration before my maternity leave started and as a result the government is now paying me my SMP directly. I've just realised that they are paying me the full £140.98 per week and aren't taking any tax out of it. But I earned enough before going on maternity leave to take me over the personal allowance threshold so surely they should be taxing my maternity pay? Or will they send me a bill at some point for the tax? Anyone been in a similar situation? I don't want to be hit with an unexpected tax bill, I'd prefer they just taxed it now if I need to pay tax on it!

Is it maternity allowance? If it so then it is tax free
tax

Has the law recently changed? I definitely paid tax on my SMP in 2016-2017 but it does state on that website that it’s tax free. Confused

Ignore me -SMP is different from maternity allowance! Contact the tax office OP incase you’re hit with a bill later down the line?

It's SMP, just paid directly to me rather than via my employer as my employer is now insolvent. My understanding is that it's taxed (if you go over your yearly personal allowance) as its earnings. When I got it before from my employer I think they took the tax off but don't know how it works when the government pay you directly.

£140.98 is under the weekly threshold for paying tax.

Just thought someone might have been in the same situation where HMRC paid their SMP directly but maybe not. Yes I know that £140 is under the weekly threshold but I've earned enough from working in this tax year (before mat leave) to take me over the £11500 tax threshold so anything above that would I think be subject to basic rate tax. I'm sure it was when I was on my last mat leave but then the tax was taken out by my employer so I didn't have to worry about it.

But you've already paid tax on the stuff youve earnt, assuming you will spread your tax free allowance evenly through the year. Since you are now earning less than the monthly tax free amount, won't you get a tax rebate at some point?

Babybel, I think you're right and you may owe tax by end of the financial year. They probably feel it's easier to leave now and charge later rather than take now and then recalculate a rebate in the next few months.

If Apr - Dec you earnt £30k
Jan- Mar you earnt £1800 SMP

You annual taxable amount will be £31800 less your tax free 11500 = 20300. 20% is £4060. At the minute youve paid 20% on 30k less 11500 = 18500. 20% tax on that is £3700.

Obv just an example calc as don't know what you earn or tax bracket or mat dates etc!

But you haven't used up all your tax free allowance yet.
So in Apr- Dec, you used 9/12 of the 11500 tax free allowance. So only 8625 has been tax free. Meaning youve paid Tax on (30000-8625) =21375, or 4275 tax so far this year.
Since the total tax due this year is 4060, there is no rax to pay, and even a small rebate due.

Oh yeah , listen to Sand. That makes total sense.

Thanks that makes sense! Was having a hard time figuring it out.