Maternity and PaternityTax

romanticjoe

Hi,

My wife was on maternity leave for 5 weeks of last year and 21 weeks of this year. We have jsut decided to move to joint assessment for tax purposes which has triggered Revenue to review our 2018 taxes. As a result, revenue have landed us with a bill of almost €900 for her 5 weeks maternity, my 2 weeks paternity leave and 2 weeks illness benefit she had to take as a result of the pregnancy (she is a teacher).

I'm not sure why the maternity and illness benefit was not taxed via a reduction in her tax credit and re issue of her tax certificate as I can see from January 2019 her 21 weeks remaining maternity is taken off her tax credits and I can tell from the calculations, this is charged at 20% as per the examples on revenue website.

My issue is, the bill we received is charging us at 40% for all 3 which doesnt make any sense to me. If the maternity is taken off tax credits for new year at 20% why are we now being charged 40% rate. I'm not sure on the rate to be charged for illness or paternity but revenue site indicates they should be charged the same way. Any guidance on the rate these should be charged at would be of great help?

They have also continued to take maternity leave off her tax credits even though she finished maternity in May. I presume the maternity tax credit reduction and rate band reduction should be removed post end of May and a new tax certificate issued?

Thanks!

romanticjoe

Revenue have come back with the following:

Please note benefits from the Department of Employment Affairs and Social Protection (DEASP) are taxable at your marginal rate of tax.

As you both earned in excess of your standard rate band (20%) any in income in excess of the standard rate band was liable at the 40% rate. Therefore the DEASP payments were liable at the 40% rate.

I'm no expert but obviously the lower band of tax is paid at 20% and above the rate band at 40% monthly throughout the year, I don't pay over 40% once my total payments for the year have reached the lower band threshold, so not sure how this can be then charged at 40%?

applejunkie

romanticjoe wrote: »

Hi,

My wife was on maternity leave for 5 weeks of last year and 21 weeks of this year. We have jsut decided to move to joint assessment for tax purposes which has triggered Revenue to review our 2018 taxes. As a result, revenue have landed us with a bill of almost €900 for her 5 weeks maternity, my 2 weeks paternity leave and 2 weeks illness benefit she had to take as a result of the pregnancy (she is a teacher).

I'm not sure why the maternity and illness benefit was not taxed via a reduction in her tax credit and re issue of her tax certificate as I can see from January 2019 her 21 weeks remaining maternity is taken off her tax credits and I can tell from the calculations, this is charged at 20% as per the examples on revenue website.

My issue is, the bill we received is charging us at 40% for all 3 which doesnt make any sense to me. If the maternity is taken off tax credits for new year at 20% why are we now being charged 40% rate. I'm not sure on the rate to be charged for illness or paternity but revenue site indicates they should be charged the same way. Any guidance on the rate these should be charged at would be of great help?

They have also continued to take maternity leave off her tax credits even though she finished maternity in May. I presume the maternity tax credit reduction and rate band reduction should be removed post end of May and a new tax certificate issued?

Thanks!

I think thats an error, I think they are treating it as additional income . Maybe give them a ring . I assume you both didnt get full pay plus the Maternity/Paternity benefits ?

romanticjoe

I think it is too but they don't seemingly..

No, we were both separately assessed for tax purposes at the time and both our pay was reduced by the amount of Maternity/Paternity pay per period and the benefit was paid directly to us. I understand I didnt pay tax on the paternity due to the way it was handled and I am happy to address it but I cant see how we have to pay both at 40% and illness at 40%. My wifes salary is only €3500 over the lower threshold so it makes no sense for her to be paying 5 weeks maternity benefit and 2.5 weeks illness pay at 40%

If revenue had adjusted tax credits and re-issued a tax cert it, the tax credits would have been deducted at a rate of 20%...