Do you pay tax on SMP? (2024)

So found this calculator that works out my monthly SMP but do you pay tax on the earnings (or is it not considered earnings?) that you get from your employer or is that money all mine to spend? I mean save?

I hate tax related questions.

Thanks.

So what I'm confused about is how much. So SMP is first 6 weeks at 90% of your wages and then the £123 a week.

I'm on 40% tax so I'm assuming they will tax my first 6 weeks as normal but then they surely couldn't take that off my £123 a week because they would leave me practically living on thin air.

ok, so found this snippet

Deductions from SMP

SMP is treated as earnings, so your employer will make any deductions (such as income tax and NI contributions) that are due. Your employer can also make other deductions from your SMP, for example pension contributions or trade union subscriptions.

What they might do is tax you 40% but then you will get a rebate at the end of the tax year, depends how organised your company is, but I would check with your payrol department, Im sure they have done it all before.

My husband had the same question, if he gets his £123 SPM and gets taxed as normal, then he will end up with like £90 for the 2 weeks.

Im going to check all this with my HR department when I hand my MAT B1 in and sort out my maternity leave.

daisyfflur said:

So what I'm confused about is how much. So SMP is first 6 weeks at 90% of your wages and then the £123 a week.

I'm on 40% tax so I'm assuming they will tax my first 6 weeks as normal but then they surely couldn't take that off my £123 a week because they would leave me practically living on thin air.

Click to expand...

Its the same as this for me.
yes you will be taxed as ususal for 1st 6weeks then theres not much they take off the 123 per week, think it should leave you with over £100 per week still.

How much tax you will pay will depend on when you go on maternity leave etc etc. You do pay tax on SMP as mentioned above and will probably pay tax at your normal rate and have to claim a rebate having submitted a self assessment.

However, looking at your due dates if you were to go on maternity leave at the start of or end of March you would probably find yourself in the situation of paying tax at 20% (even on the 90% of your earnings depending on how much you earn) rather than at 40%...which would be adjusted accordingly when you go back to work. I would suggest looking at this as a way to reduce your tax bill - I used to work in Tax

xxx

Don't forget you can earn a certain amount without being taxed.

So for simplicities sake......

The tax year runs from 1st April - 31st March.
You can earn X amount (usually £4.5k?) before you start paying tax.
So £123 x 39 = £4797. So you'd only start paying tax on £297.

Does that make sense? Obviously it's not quite as simple as that unless you've only just started paying tax as last years tax will be taken into consideration (but not sure how). Try the CAB if you want a more definite answer x

1st_timer said:

How much tax you will pay will depend on when you go on maternity leave etc etc. You do pay tax on SMP as mentioned above and will probably pay tax at your normal rate and have to claim a rebate having submitted a self assessment.

However, looking at your due dates if you were to go on maternity leave at the start of or end of March you would probably find yourself in the situation of paying tax at 20% (even on the 90% of your earnings depending on how much you earn) rather than at 40%...which would be adjusted accordingly when you go back to work. I would suggest looking at this as a way to reduce your tax bill - I used to work in Tax

xxx

Click to expand...

If only I could take the whole of april off (I'd love to) but annoyingly its just a little bit too soon. Drat. Thanks for the info though, much appreciated.

daisyfflur said:

1st_timer said:

How much tax you will pay will depend on when you go on maternity leave etc etc. You do pay tax on SMP as mentioned above and will probably pay tax at your normal rate and have to claim a rebate having submitted a self assessment.

However, looking at your due dates if you were to go on maternity leave at the start of or end of March you would probably find yourself in the situation of paying tax at 20% (even on the 90% of your earnings depending on how much you earn) rather than at 40%...which would be adjusted accordingly when you go back to work. I would suggest looking at this as a way to reduce your tax bill - I used to work in Tax

xxx

Click to expand...

If only I could take the whole of april off (I'd love to) but annoyingly its just a little bit too soon. Drat. Thanks for the info though, much appreciated.

Click to expand...

If you give your company enough notice they should be able to work it out so that you don't have to pay tax at 40% on either your salary for April or for your 6 weeks at 90% etc...

When you go back to work they will (I imagine) start taxing you at a blended rate of 20% and 40% depending on when you go back.

xxx

CocoaOne said:

Don't forget you can earn a certain amount without being taxed.

So for simplicities sake......

The tax year runs from 1st April - 31st March.
You can earn X amount (usually £4.5k?) before you start paying tax.
So £123 x 39 = £4797. So you'd only start paying tax on £297.

Does that make sense? Obviously it's not quite as simple as that unless you've only just started paying tax as last years tax will be taken into consideration (but not sure how). Try the CAB if you want a more definite answer x

Click to expand...

Tax starts on 6th April and the personal allowance for this tax year is £6.4k which will increase next year but I imagine only slightly due to the low inflation so you can take your 39 weeks and pay no tax (although may need to claim this back)

Tax only applies on SMP - if you are entitled to MA and not SMP you don't pay any tax xxx

You won't pay 40% tax. Your tax payments are worked out like this:

First 6475 a year is non-taxable (or whatever your tax allowance is)
From 6475 to I think 40,000 a year is at 20%
After that it's 40%

So if you are only getting 123.06 a week, you will only ever break into the 20% bracket. It is then up to youa t the end of the tax year in April, to work out how much tax you should have paid versus how much you HAVE paid, and to send your claim to the tax office. This is the advice I used to have to give as a payroll clerk. You may even end up with a slight tax refund through your wages depending when your maternity starts (for eg, if you have paid 40% tax since april, and you take maternity from next week, making a sudden income drop (a HUGE income drop), your tax will be readjusted by their payroll system and you may end up either with a refund or just paying a matter of pence in your next monthly pay.