Maternity Leave paid in a lump sum

[ladymia]

Hi ladies

I hope nobody minds me asking in this section.

Has anyone ever had their SML paid in a lump sum?

I will be made redundant but still be entitled to SML and thinking of doing this as I won't be coming back to the company.

Has anyone done this? I phoned maternity action line yesterday and they suggested i do this.

Cheers

Will you be receiving a redundancy package? If that and SMP are lumped together could you end up paying more tax?

Yes this is what I am worried about I am not sure how it will work.

I am receiving a small redundancy payout.

Something about tax is in my mind on this.

Have you looked into any implications?

Sorry could be a red herring but worth asking & checking you would be no worse off.

as long as it is stated as maternity pay you shouldn't be taxed.

To be on the safe side give hrmc a call on their helpline.

I think they said there are only 2 risks

1. overpayment - you return to work earlier and then have to pay it back (which I won't as I am not coming back)

2. underpayment - the SML changes in the year to increase which you might miss out on a higher payment. i am not worried about this really.

To be honest I just feel I don't want to be receiving this from a company I will no longer be working for so would prefer the lump sum and then not have ties here. If that makes sense.

You still pay tax and ni on smp even if you are paid it monthly.

Thanks I think i will phone HRMC and check with them

No expert but tax is payable on SMP (if your gross income for the year is high enough). Having it in one lump sum could mean that you pay more tax as you only have 1 years personal allowance to set against it. If you were being paid it monthly it is likely this would straddle 2 tax years and therefore, 2 personal allowances. Def worth a closer look.

If you currently salary sacrifice for childcare vouchers for other children, you would lose out getting a lump sum as you would only get the vouchers paid to you for one month, as opposed to for the duration of your maternity leave whilst you are on SMP. If that makes sense?

Thanks everyone i think i need to look into this a bit more.

lobsterswife - I don't have any other children or don't have anything like that.

I don't mind if i miss out on some of the money because of tax I would rather just make a clean break from here and focus on the future.

Also anything like a car allowance would normally be paid monthly throughout mat leave.

Yes the exact same thing happened to me last week and I will be receiving my SMP in a lump sum. It is taxable but your redundancy payment shouldn't be (think you can get up to 30k free of tax) so make sure they are paid in two separate chunks. Good luck!