Tricky One: Tax after Redundancy and Maternity leave

muddy697

Hello,
I wonder if anyone has any advice.
I had my first baby last year and took 4 months unpaid maternity leave after my paid maternity leave finished.
I returned to work got pregnant again quickly and was made redundant prior to my next maternity leave starting. I was 7 months pregnant at this time and they agreed to pay me a maternity leave (all be it one starting earlier) and then make me officially redundant when this finished.
Been in the company 8 years so payout is ok. I'm coming to the end of this paid maternity and I have the opportunity to add on 4 months unpaid mat leave if I want to. There are a few pros for doing this but I wondered if anyone had any clues on if there would be any beneficial tax reasons to stay employed for a bit longer on an unpaid maternity leave?

Thank You

gerrybbadd

It may have a positive impact on the amount of exemption due against the redundancy payment, depending on your start date with the company.

So for example, if you have 5 years 9 months service, you are only entitled to 5 years worth of exemption.

If you ad another 4 months on, then that's 6 years 1 month, so you are entitled to 6 years exemption.

Other than that, and additional accumulated tax credits, there's no advantage

chickenlicken2

Would your redundancy payment go into the 2016 tax year OP if you took the unpaid leave?

For social insurance you'll have the 16 weeks unpaid leave as credited contributions if you take the full period.
However it's 16 weeks of no income.

muddy697

Hi Gerrybbad,
A need hr to verify my exact end date of my mat leave. Its either 01/09 or 18/19 . My 8 year work anniversary would have been 01/10 so I could take a few weeks unpaid if that might make a difference? My package works out to be 6 weeks wages per year of service, doesn't need to be full years was my understanding.

Hi Chickenlicken,
If i take 16 weeks unpaid I finish on 22/12 so just short of jumping into next year if September 1st is my correct end date.

Thanks !

muddy697

Hi Gerrybbad,
I need hr to verify my exact end date of my mat leave. Its either 01/09 or 18/19 . My 8 year work anniversary would have been 01/10 so I could take a few weeks unpaid if that might make a difference? My package works out to be 6 weeks wages per year of service, doesn't need to be full years was my understanding.

Hi Chickenlicken,
If i take 16 weeks unpaid I finish on 22/12 so just short of jumping into next year if September 1st is my correct end date.

Thanks !

gerrybbadd

muddy697 wrote: »

Hi Gerrybbad,
I need hr to verify my exact end date of my mat leave. Its either 01/09 or 18/19 . My 8 year work anniversary would have been 01/10 so I could take a few weeks unpaid if that might make a difference?

I don't think it'll make much difference in this case then to be honest. It'd really only be if you were nearing another complete year, the maternity would boost up the amount of months. So, if you had 7 years 9 months, and had 4 months maternity, it'd be boosted to 8 years.

muddy697 wrote: »

My package works out to be 6 weeks wages per year of service, doesn't need to be full years was my understanding.

Thanks !

For tax purposes, your exemptions have to be full years. If you work there for 8 years 11 months, you will only get 8 years worth of exemptions

muddy697

Hi Gerrybbadd,
Thank you for taking the time to answer my question. Sorry to be a be bit dense here . I'm not really that stupid, it's just tax related issues that make my brain hurt :-)
From your last comment you talked about tax exemptions. Do you mean the value of my severance package that I wont be taxed on?
Would that make it worth me pushing out my end date of 01/09 (confirmed now) to 02/10 so I hit that magic 8 years service rather than 7?
Thanks a mil
J