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Original poster

maternity pay? Tax?

26 replies

LargeGlassofRed · 04/02/2009 21:41

Just trying to plan my maternity leave and pay.

Do I pay tax on maternity pay.

I've looked up I will get 6 weeks at 90% pay then 33 weeks at £117.
So do I then need to take tax and Ni of this?

Many thanks my heads swimming!

OP posts:
pleasechange · 04/02/2009 21:44

I've been getting a tax refund every month in my payslip since going onto the statutory amount. I'm guessing this is because it's a YTD correction and hope they've got it right!

VeniVidiVickiQV · 04/02/2009 21:49

Yes - it's all taxable, but the the amount you will be earning will be such that you wont pay much tax or NI. It's usually all worked out on a cumulative basis (unless you are on a BR or Month/Week 1 tax code).

roquefort · 04/02/2009 21:51

Yes maternity pay is taxable; you may get refunds because your tax in previous months will have been calculated assuming that you continue to earn at the same level thoughout the year.

Ceebee74 · 04/02/2009 21:51

Sorry to hijack this thread but what does a BR tax code mean??

We have just noticed my DH's wage slips say this and were wondering...

VeniVidiVickiQV · 04/02/2009 21:59

Indeed roquefort. Although being so close to year end, I'd not imagine it would make much difference to the op in this case.

BR means Basic Rate. It means he is being taxed at a standard 22% on EVERYTHING he earns.

Does he have another job, or has he started a new one recently?

Ceebee74 · 04/02/2009 22:01

Excuse the language but oh sh*t!

No he started a job last April and he has been on that tax code ever since (our fault for not checking his payslip properly) and he earns far more than the earnings limit for the 22% which means we owe the taxman loads of money I guess....aagh!

Original poster
LargeGlassofRed · 04/02/2009 22:05

thanks everyone very difficult to work out then but I suppose the tax on the 117 will be small maybe If I count on £100 a week after tax and NI ?

OP posts:
VeniVidiVickiQV · 04/02/2009 22:10

His employer has been pretty lapse about sorting it then. I cant believe they didnt receive a tax code change.

I'd say he's probably overpaid tax rather than underpaid it, tbh.

Can you give me an approximate of his earnings? If it's over 36,000 then he may well owe.

VeniVidiVickiQV · 04/02/2009 22:12

LGOR - thats a conservative estimate I'd say.
Most people can earn 6030 before paying tax so it'd be a few pounds of each really.

Original poster
LargeGlassofRed · 04/02/2009 22:49

thanks, thats great, trying to plan every month, so don't have problems, I know when the twins are here time will just fly

OP posts:
VeniVidiVickiQV · 04/02/2009 22:59

OMG! It wont fly, it will zoom with twins!!!

Dont forget to sort out tax credits as soon as they are born. Every little helps. x

Original poster
LargeGlassofRed · 04/02/2009 23:10

Thanks I will, moving in with dp soon so they will change anyway but hopefully still get a bit while on maternity leave as I don't think they take maternity leave into the calculations.

OP posts:
Ceebee74 · 05/02/2009 08:34

VVVQV - unfortunately he earns a lot more than £36k - more like £60k so we know it will be quite a bit we owe(although am I right in thinking that he has been taxed 20% on everything including the £6k that you are allowed to earn before being taxed ifyswim?)....I am on maternity leave at the mo and a huge tax bill really is the last thing we need!

We are wondering if his P45 went astray somewhere along the line

lowrib · 05/02/2009 14:27

My payslip says:

SMP - 117.18
Net pay - 115.64

Tax code 603L (emergency tax I think)

VeniVidiVickiQV · 05/02/2009 18:57

Right, ceebee, based on approximate calculations of 60k in a year on 603L code he'd owe about 14.6k in tax in total for the year.
On the BR code he'd owe 12k so it could be that you will owe money at the end of the year - dependent on what the tax office deem your DH's code to be.

Best to get on the phone to them now, tbh and sort it out before you get a nasty shock.

Original poster
LargeGlassofRed · 05/02/2009 20:14

thanks for all the help all,
all I need to do now is find a house, move in with dp.
Oh and clear ten years of crap from this house

OP posts:
Ceebee74 · 05/02/2009 20:41

VVVQV - thanks for that info - that is pretty much the amount I had calculated. DH is chasing his employer to ask them to sort it out. Do you know if they would expect us to pay it up front or readjust his code for next year to recoup it that way?

Eddas · 06/02/2009 21:31

I just want to let you know that the basic rate of tax is not 22% anymore it's 20%.

Ceebee, you may find the tax office will collct any underpayment via his next years tax code rather than wanting it back all at once. It'd be spread over the next year, which would mean he got less pay each month but better than having to find £12k+ all in one go!

woodstock3 · 07/02/2009 00:16

my dh had this - his employers undertaxed him for five years before anyone noticed (put him on basic rate when it should have been higher) and we had a whopping great tax bill (doesnt help that he did not do his tax return for five fecking years, admittedly).
did your dh do a tax return ceebee? cos it should have picked it up when/if he did.
if not, if it is less than around £5k they may let him pay it back in instalments by collecting direct from next year's salary every month so you will get less than you are used to in hispay packet but wont have a huge horrid bill. we had to pay the lot back upfront - i was eight months pregnant at the time the bill arrived - but i think this was because dh had been so crap about doing tax returns and had also been ignoring letters from the revenue for months and months so had reduced his options. they will be much more sympathetic if you are quick off the mark to contact them and make arrangements to pay, i'm sure.

solo · 07/02/2009 00:35

Anyone else find the tax man scary?

questions2008 · 07/02/2009 12:03

Sorry to hijack, but Eddas I'm sure I'm being taxed 22% still on BR, is this possible or the accountant's mistake?

Eddas · 07/02/2009 13:02

if you mean for your tax return then that's right as the return that's just been due(by 31stJan) relates to the tax year 2007/08 which BR was indeed 22%, but for this year 2008/09 it's 20%

HTH

Ceebee74 · 07/02/2009 17:04

Thanks for all the info - I am going to sound really stupid now but I thought tax returns were only for people who are self-employed?? Should DH have done one if he is employed? Should I be doing one????

LIZS · 07/02/2009 17:14

You can request to do a return foi your cirucmstacnes change during the year and you have overpaid or you or they could request one if there is income not taxed at source (ie through paye or interest on money in bank or building society) such as by being self employed or renting out property.

Eddas · 07/02/2009 18:17

ceebee, quite often the tax office will issue tax returns to a higher rate tax payer (such as your dh) the reason being that quite often they have savings such as bank interest or dividend income which is taxed at basic rate when infact because the person is a higher rate tax payer it should be tax at the higher rate. Bank interest for example mainly has tax deducted at source at 20% and dividends it is 10% because they are officially tax after employed income a higher rate tax payer should pay 40% tax on all bank interest and 32.5%(I know stupid rate!) on dividends.

The tax system is not an easy one to understand! But if the tax office haven't issued your dh with one then don't panic!