Tax and SMP

[Pavlov]

Is SMP taxable? I have been taxed this month for my SMP only wage. Is this normal? I am not over my tax allowance for the year, given it is April.

Also, how about pension? I specifically asked NOT to pay the 'superanuation' for the period I am on ML. I had a form with a question to tick yes or no to this and I ticked no and signed it. I had been paying pension for the last few months, but had been paid some company MP too, although I have had pension taken from the the entire amount of pay (SMP and CMP).

What is normal? Before I go in guns blazing as I am down about £60 from what I had expected, and given the tax credits have decided that I am getting less now than in March on their 'estimate' til they send me my paperwork, I am also down there by £80, and as you know, £140 down while on ML is not great. (I might do another thread on the WTC/CTC thingy as it does not make sense).

OK, so it is to be expected then, tax on £530? (or thereabouts). I guess on the assumption that I will be returning to work on my usual salary?

Thanks, I won't go in crazy newborn mother then, just confirm they know what they are doing then which i seriously doubt but thats another story

PAYE splits your tax free allowance equally over the year. As others have said SMP is taxable income.

ok, so i will just go with it then. Our payroll is outsourced too. Well, of sorts. I work for the government, for the home office, and I am paid by the treasury via a local government in another area , there have been the odd issue before, when information has not been passed from our finance/hr team to the payroll dept, but not payroll themselves messing up, so guess they know what they are doing, they pay thousands of people (does that mean anything?).

How about the pension? If they locate the paperwork specifying that I did not want to pay while on ML, will they be obliged to refund this back to me?

lenin in total, probably about £200. Its not huge, but it is enough to take the strain of a seriously tough ML as DH was made redundant (or rather, he was got rid of as redundancies were in the offing and he was within a year, so not even a severance pay ).

Under normal circumstances I would not bother trying to get it back.

(that is presuming that I would still pay pension on the CMP, if not being required to pay the pension on the CMP then more like £650?)

Yes, they actually asked the question, the least they can do is make sure it is acted upon! I would not have considered it tbh if they had never given me the option, but as they did, I budgeted as if this money was not being taken out. (i say budget in the loosest possible terms, more like lurching from month to month )

What tax code are you on? I'm going to disagree with everyone here and say that no, you shouldn't have been taxed if you are on 647L cumulative (so no wk1/mth1 or x's at the end of the code) as 647L = £6475 you can earn tax-free over 12 months and 6475/12= £540 (rounded up) you can earn each month tax-free.

It sounds like something has gone slightly wrong with your payroll. Everyone is right in saying that your tax should adjust itself and even out, if you're on a cumulative code, but that's the problem - it should have adjusted itself THIS month to take into account you've earned under your monthly personal allowance.

That's if the SMP was your only income this month - if you had some company maternity pay, then yes, you will have paid some tax if you've earned over £540.

I think OP said in her initial post that her pay consisted of Stat maternity pay plus company maternity pay. Her query was that she thought that SMP should not count as taxable pay, when it in fact does. As do all kinds of benefits.

cantcarryon - I have previously had company maternity pay, this month, for the month of April, was solely SMP which was just under £540. I do agree with your explanation though, that seperately from SMP being a benefit, even if it was a wage, it is under the taxable threshold, so should not be taxed as it is the first month of the financial year.

I am on a normal tax band, having worked for my employer for years.

I have emailed them for an explanation as i am not happy that they have taken my pension from me when I specifically asked them not to, so will see what they say.

OK Pavlov did not realise that your April pay had only SMP. In that case what is the tax code shown on your payslip? Could be that the tax code is wrong and does not give you enough personal allowances to make your taxable pay in the month below the taxable threshold. I know that the tax office have installed a new computer system recently which has had some teething problems and a lot of incorrect tax codes have been issued. Have you received a notice of coding from the tax office for the new tax year? If so, you need to check it carefully to make sure it is correct.

Actually, what I meant by taxable is that it would be included in the total pay which is liable to tax. It is only actually subjected to tax if your total taxable income is over the tax free allowance for the month. A lot of prople think that benefits, including SMP, don't get included in the calculation of taxable pay, but they do. If you had other sources of income in the month these would take you over your tax free allowance and you would pay tax in the month.

I am a chartered accountant and have been involved in company payroll processing for a long time so this is where my advice is coming from.

The pension deduction is another issue and they should definitely not have deducted this as you specifically asked them not to. i would ask them to refund it. I believe that they are obliged to keep on making any employer contributions throughout your period of ordinary maternity leave though so make sure they are doing this if you have been receiving employer contributions previously.

Thank you, I get it now I think The tax code, (not got it in front of me atm) is the same as normal from what I can recall, no letter from tax office or anything. We shall see what payroll tell me fob me off with.