Maternity Pay

[Amby99]

I’ve been at my company 4 years and they offer 5 months full salary and then afterwards it’s SMP which I believe would be the lower amount of £187 per week for me (as per gov website)…

I had no idea that SMP was taxed (first child so couldn’t have known) and when I saw the £187 figure I just assumed it was so low it couldn’t be tax worthy.

my question is - is it taxed at 20% or 40%? I’m currently on the 40% tax bracket so I guess that means I’ll get taxed on ~ £748 a month???

Sorry if this question sounds naive and I’m grateful my company offer 5 months full pay but I didn’t even think people that earn £750 a month get taxed? I remember when I was a student and worked at a pub and got that amount I certainly wasn’t taxed so how come SMP is?

I’m very bad at maths / finances so if anyone could explain kindly i’d be very grateful

Depends when you go on mat leave and when the SMP would start. You have your personal allowance that is tax free, each payday, HMRC assumes you'll earn that each month for the rest of the year, if at the end of the year you've overpaid tax you can claim it back.

ahhh I see. I guess I’ll be going on maternity leave around February (baby is due beginning march)… so as that’s near the end of the tax year it might work out better.

sorry - so naive but I think I know what you mean

Ah but then I’ll have 5 months of full pay! Which might take me to July. Got it!

It will all depend on when in the tax year you start your Mat leave. You are taxed cumulatively. If say you work normally for 5 months from April, then start Mat leave in September and then go onto statutory in Feb and March, you would be taxed a on the stat pay if you were still over the threshold for 40% or 20% when the stat pay kicked in. If the stat pay continued into the next tax year, then you wouldn’t be receiving enough to be taxed. Hope that makes sense.

In that case your first two months will be taxed at 40% as they’re full pay in the current tax year 2025-26 (remember it’s 40% over the 50270!)

After that it depends on your salary - you’ll have three months full pay, and approx 4 on SMP (your full pay is most likely full-smp as the employer will ‘top up’ - you won’t get more than your full salary). Then up to 3 months unpaid leave available to total 12 months/52 weeks.

if you return for those 3 months at the end you’d get full pay and you’d have another 2 months before the end of the 2026-27 tax year - so 4 months smp and 8 months full pay across the year in total. If that pushes you into the 40% bracket you’ll pay 40% on whatever you earn over the 50270.