Tax and maternity pay

[stanley10]

Hello, wondering if the wise people of Mumsnet can answer a question for me. I am on maternity leave and will be on a lower tax band as my employer will pay 50% pay for six months.

I have two questions:

1. Does that 50% always include statutory or is that additional? I did ask payroll before I left and she said it was additional, but now I’m wondering if she had misunderstood my question.

1. Will I get a tax rebate at the end of the year or will tax be reduced on a monthly basis with no rebate? I started maternity leave in late May. I’ve just received a letter saying I’ve changed tax code from 1185L to 1183L so am wondering if they cleverly reduce payments as I go rather than shoving them all into a rebate.

Thanks very much in advance

If you have a new tax code you shouldn’t need a rebate at the end of the year.
With regards to this 50%- depends how it is worded in your employers maternity policy. Some will be 50% plus SMP (mine is) but others will be inclusive of SMP

Thank you @MissMarks that’s very helpful

Why are you going to be on a lower tax rate? The normal personal allowance is 1250L so do you get benefits on kind or underpay in a previous year?

But anyway, as you started your maternity leave early in the tax year you will just be taxed on your reduced income correctly.

I have no idea. I just got the letter around tax code change today. I will earn significantly less so would obviously pay less tax.

But your Current tax code Means you are paying more tax.

The figures on the tax code indicates the amount of money you are allowed to earn per year before paying any tax. It’s your Personal Allowance.

A standard tax code of 1250 means someone can earn £12,500 per year without being taxed. But to even it out it’s dividedso if you are paid monthly you can earn £1,041 per month. Tax is cumulative so if you earn more one month and less the next it all evens out unless you suddenly start earning more or less towards the end of the tax year.

Your tax code means you can only earn £11,183 per year tax free. Usually that’s if you owe tax from a previous year or you have other taxable benefits such as company car or medical insurance.

When I went down onto SMP, I got tax back every month which actually brought my pay back up to a reasonable amount. If you are paid PAYE any tax refunds should be done automatically.