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Net cost of Maternity Benefit

  • 24-02-2015 11:05pm
    #1
    steelbar
    Registered Users, Registered Users 2 Posts: 352 ✭✭


    Hi there,
    Not 100% sure I am in the right place, so apologies if I am not.
    Trying to work out the amount of tax my wife will pay on her maternity benefit.
    Using the 2014 marginal rate of 41%.
    Benefit of €230 per week for 26 weeks
    Her employer did not pay her while on leave (unfortunately)

    Am i right in saying the following....

    Maternity Benefit (26 x 230) 5,980.00

    Tax on Maternity Benefit (5980 * 20%) 1,196.00
    Effect of Reduction in Cut off (5980* (41%-20%)) 1,255.80
    Total Cost of benefit 2,451.80


Comments

  • #2
    2ndcoming
    Registered Users, Registered Users 2 Posts: 3,588 ✭✭✭2ndcoming


    If her employer wasn't paying her at the time and her tax credits were left untouched they would cover the income (e.g. weekly income 262 @ 20% = 52.40, weekly single credit 63.46, net liability 0.00)

    If you took her credits for the period it might go more like 262 @ 20% = 52.40, weekly PAYE credit = 31.73, net liability 20.67)

    There's no real "cost" as €262 a week is still more than whatever the tax bill might be on it, so it's a gain overall either way.

    There are several variables though (your respective salaries, whether the employer took account of the mat. benefit upon her return to work, etc) so the best bet is to get a P21 done and that will show the lie of the land for definite.


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