Maternity Benefit to be taxed

aniascor

Just saw on RTE: Maternity Benefit will be treated as taxable income from 1 July 2013. As is the case with all social welfare payments, Maternity Benefit will continue to be exempt from the USC.

I guess it makes sense - I remember being shocked last time I was on mat. leave when I got my pay cheque and realised that I was financially better off on mat leave than I was while working.

And for anyone whose employers don't top up their salaries, they should be below a taxable threshold anyway right? So really it just means that none of us will be better off on mat leave than working? Or am I misinterpreting it?

MurdyWurdy

aniascor wrote: »

Just saw on RTE: Maternity Benefit will be treated as taxable income from 1 July 2013. As is the case with all social welfare payments, Maternity Benefit will continue to be exempt from the USC.

I guess it makes sense - I remember being shocked last time I was on mat. leave when I got my pay cheque and realised that I was financially better off on mat leave than I was while working.

And for anyone whose employers don't top up their salaries, they should be below a taxable threshold anyway right? So really it just means that none of us will be better off on mat leave than working? Or am I misinterpreting it?

I'm wondering this too - I plan to claim it from July 2013 but am finishing up work when I go on maternity leave (I'm on a contract) so won't get be getting it topped up by an employer. I was going to get assessed jointly with my husband so he gets my tax free allowance but will that mean my maternity benefit will be taxed or not, will it be below the threshold? I don't really know how it works

How Strange

Oh well there goes my nice little tax refund when I go back to work after this maternity leave

Moonbeam

I was much better off too:) it was lovely.

loubian

I don't fully understand tax income n refunds... When you say it will be treated like taxable income, what exactly do you mean? I'm a little dumb when it comes to this sort of thing! :-P

Moonbeam

if your employer pays you on leave they top up the difference between maternity benefit and what you earned,the maternity benefit was not taxed though so people on the higher rate of tax especally would earn more on maternity leave.

implausible

How Strange wrote: »

Oh well there goes my nice little tax refund when I go back to work after this maternity leave

It's not taxable until July next year, so you will be able to claim for this year, using this year's tax bands.

How Strange

I'm going on maternity leave in April next year. I'll get about 12 weeks tax free. The worst part is bearer the end of the 26 weeks as my employer pays 100% for 3 months, 70% 4-5th months and nothing in 6th month. I want to moan but I know I'm more fortunate than a lot of women who don't get a salary top-up.

implausible

How Strange wrote: »

I'm going on maternity leave in April next year. I'll get about 12 weeks tax free. The worst part is bearer the end of the 26 weeks as my employer pays 100% for 3 months, 70% 4-5th months and nothing in 6th month. I want to moan but I know I'm more fortunate than a lot of women who don't get a salary top-up.

Apologies, thought you were just returning! Any way you can get your employer to reorganise the top-up?

You're right though - we're lucky to have the salary topped-up. I'm surprised the Govt hadn't thought to hit this before. I presume it won't affect anyone who is only getting the maternity benefit.

dufferlover

So for example, I'm going on mat leave on April 19 so do I, A: not pay tax from April 19 to July 1st but pay tax thereafter or B: Avoid the tax thing altogether because I started mat leave before July 1st?

implausible

dufferlover wrote: »

So for example, I'm going on mat leave on April 19 so do I, A: not pay tax from April 19 to July 1st but pay tax thereafter or B: Avoid the tax thing altogether because I started mat leave before July 1st?

Will your employer be topping up your Maternity Benefit?

At present Maternity Benefit is paid weekly, so it won't be taxed up until July 1st and will be after - I presume. After July 1st, if you are getting a top-up, you will be taxed on top-up + MB, instead of just on the top-up.

dufferlover

Sorry, yes I'm getting a top up for the first three months and thereafter will be on state maternity benefit only.

How Strange

dufferlover my understanding (based on my own presumptions!) is that you'll receive your statutory maternity pay tax free up to the end of June so you'll actually be better off financially if you receive the smp directly from social welfare and your employer pays your salary top-up.

From 1st July whatever smp you receive will be taxable. The gross amount you receive depends on your salary so the tax payable depends on the gross amount.

Zizigirl

I feel sorry for employees that don't get paid top up by employers. As they will have worked at least six months of the year (if not maybe 8/9 months one year and 8/9 months the next year) they will probably be dealing with a tax bill for their maternity pay!

I really did not think he'd do this for everybody just those that get full pay from employers. Grossly unfair on women that are already taking a financial hit because they want to have children.

Rachineire

I only get a top up from my employer for the first 6 weeks as I have only worked for them for just over a year before my leave....even with only having 6 weeks of a top up I am STILL better off financially on leave than I was working. Which i found to be insane, but it definitely took some of the stress away for me on not working for the first 6 months of baby's life.

Thankfully since I go back to work in June the taxation won't affect me, but any children I have in the future it will! Hopefully I will have a better paying job by then though! I feel bad for the mammies to-be that would have been in the same position as me, being better off on leave than working! Hope it doesn't hit the final cost too badly!

How Strange

If you get €260 maternity pay weekly which I think is about the maximum amount then that equates to approx €14000 per annum which is below the tax threshold. It remains to be seen if its eligible for prsi/USC contributions in which case there would be a small weekly liability.

This is really only going to affect women who get a salary top up. They/we won't benefit from the additional money that we got because maternity pay was tax free and our nice tax refund when we go back to work. For me it probably means not taking a few weeks unpaid leave. The last time around I temporarily robbed Peter to pay Paul and used my bit of a tax refund on my first salary back at work to pay my debts.

But as I said earlier I consider myself fortunate to get a salary top up for most of my maternity leave so I can't complain too much!

Digs

It's €262 is the max alright I think how strange. My boss confirmed two weeks ago I wouldn't get the top up, after four years dedicated service I am devastated. We were taken over by a large multi national last year so they are too busy chopping the life out of the company to look after pregnant women anyway whinge over there are those in a worse position...

Am really hoping it will have no effect on me as you have surmised!

Rachineire

Digs wrote: »

It's €262 is the max alright I think how strange. My boss confirmed two weeks ago I wouldn't get the top up, after four years dedicated service I am devastated. We were taken over by a large multi national last year so they are too busy chopping the life out of the company to look after pregnant women anyway whinge over there are those in a worse position...

Am really hoping it will have no effect on me as you have surmised!

thats awful that you wont get the top up! I hope your boss had the decency to apologize and be ashamed!

Digs

Rachineire wrote: »

thats awful that you wont get the top up! I hope your boss had the decency to apologize and be ashamed!

Nope he was actually quite blasé about it which hurt me even more.... Bearing in mid I'm a walking hormone lately

Zizigirl

I'm not a hundred percent sure of my figures but these are fairly accurate. The thresholds for PAYE and PRSI are somewhere in the region of €18000 per annum.

Take a female Employee on €36000 per annum with no top up from employer. Maternity starts November 2013. In 2014 this particular person will return to payroll circa beginning May 2014, will earn €24,000 from employment and €4192 from maternity benefit.

This €4192 is subject to taxes and unless the said female works this out and manually gets revenue to amend current tax credits in 2014, she will end up with a bill of at least €838 at the end of the year.

I had this problem with JSB for years when signing on during summer holidays! Tax bill every year.

wmpdd3

I thought this!

You could end up getting a letter half way through the next year from revenue telling you that they will be changing your tax credit and then get screwed in tax for the rest of the year while you pay off the underpayment.

movingsucks

I'm surprised to see so many people getting pay from their employers for maternity leave I never worked anywhere that paid it and none of my friends or relatives did either. We're in the wrong business!

uli84

hmmm so if my top up finishes end of Jun and from July im only getting state maternity benefit will I still get taxed on what i was receiving until End of June?

dufferlover

I was speaking to a friend who works for social welfare this evening and she is of the opinion that anyone who starts mat leave between now and the June 30 will not be effected.
She explained it like this. Job seekers benefit was reduced from 12 months to 9 months with effect from Jan 1st. So lets say tomorrow i sign on for JSB I will get it for 12 months but my friend signs on on Jan 2 she will only get it for nine months.
So my mat leave is due to start mid-April so I won't be effected.
Now she's waiting on conformation from revenue but that's what she reckons it is.

How Strange

Yes I'm still waiting to read the finer points of how it will be implemented.

Once it's finalized I'll speak to our payroll provider about how they'll treat it. There's no prsi or USC liability which is good news so the weeks you're just receiving your maternity benefit you shouldn't have to pay any tax.

pologirl

dufferlover wrote: »

I was speaking to a friend who works for social welfare this evening and she is of the opinion that anyone who starts mat leave between now and the June 30 will not be effected.
She explained it like this. Job seekers benefit was reduced from 12 months to 9 months with effect from Jan 1st. So lets say tomorrow i sign on for JSB I will get it for 12 months but my friend signs on on Jan 2 she will only get it for nine months.
So my mat leave is due to start mid-April so I won't be effected.
Now she's waiting on conformation from revenue but that's what she reckons it is.

Hi dufferlover please let us all know what your friend finds out, this would be excellent for those of us due to strat mat leave before july 1st i will watch this post eagerly!! fingers crossed ladies

Moonbeam

movingsucks wrote: »

I'm surprised to see so many people getting pay from their employers for maternity leave I never worked anywhere that paid it and none of my friends or relatives did either. We're in the wrong business!

The civil and public service pay,a lot of the huge multinationals pay,university staff get paid and other companies that can afford it and value their work force pay it too.

How Strange

I've never worked in a company that didn't pay.

zefer

dufferlover wrote: »

I was speaking to a friend who works for social welfare this evening and she is of the opinion that anyone who starts mat leave between now and the June 30 will not be effected.
She explained it like this. Job seekers benefit was reduced from 12 months to 9 months with effect from Jan 1st. So lets say tomorrow i sign on for JSB I will get it for 12 months but my friend signs on on Jan 2 she will only get it for nine months.
So my mat leave is due to start mid-April so I won't be effected.
Now she's waiting on conformation from revenue but that's what she reckons it is.

Hi Dufferlover, did you get an update on this by any chance?

dufferlover

Hey ladies sorry for the big delay. Totally forgot to come back to the thread. Baby brain!

Looks like I was wrong. We'll all be taxed on it from July 1 sadly.

Bid08

sorry can I ask then, im not pregnant but hopefully will start to TTC soon which will be my 1st so I never even realised that maternity pay was not taxed.

my company pays full maternity benefit so what im wondering will the tax % change from what I am on now? Basically I just wondering will I be worse off my normal monthly salary when on maternity leave?

uli84

Sooo confused-my top up finishes end of Jun and from 1st of July im only getting state maternity benefit will I still get taxed on what i was receiving until End of June?

How Strange

There's no legislation past yet to enact this stage into law do everything is speculation at the moment. From what I can see if you get your salary top up and benefit then you'll receive around the same as your monthly net salary. It will probably be slightly more as the maternity benefit is not to be subject to prsi and USC.

If you only get the benefit then you shouldn't be taxed at all as it falls beneath the threshold.

However, as I said, it's all speculation at the moment.

Zizigirl

uli84 wrote: »

Sooo confused-my top up finishes end of Jun and from 1st of July im only getting state maternity benefit will I still get taxed on what i was receiving until End of June?

No. You will be better off up until End June as the portion of your wages from state benefit (prob €262 per week) is tax free and wages will reflect this.

However the money you receive from DSFA from 1st July is subject to tax. It is confusing but the DSFA will not send anything to your employer or deal with taxation. At the end of your maternity you will go back to work and your employer will calculate your wages using cumulative tax credits as normal.

You will then have two options, one contact revenue and ask for amended tax credit statement, supplying them with information about how much you were receiving from DFSA or wait until 2014 and balance with revenue then.

Regardless of whether the amount received from Social welfare is under the weekly threshold or not, It will depend on how much people are earning over the course of the whole year whether they will owe anything or not. I know if I end up in your position I will be contacting revenue just before I go on maternity and supplying them with the information then as it would mean I won't end up owing regardless.

I really don't think it is speculation, I only wish it was, I think this will happen but the 1st July start has lessened the pressure on the government to supply us with full information just yet.

The only reason I'm aware of this situation is that I claimed welfare during school summer holidays for a good few years and I had the tax issue then.

How Strange

Zizigirl it is speculation because it hasn't even been passed into law yet. The revenue have no info about it, the social welfare have no info and it's really up in the air as to how it will be treated. Our payroll provider said they have had no instructions yet either. They attend conferences around budget time to find out how the changes for the following year will be treated and up to today they've heard nothing.

LegacyUser

I do not get it at all. I have worek on my full salary over 2 years I will not get top up just money from Social Welafare and this almost only half of my salary. I'm scared to death how am I going to survive and thinking about going back to work after 3 month (poor baby of mine) Does it mean I will still be taxed.