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Better to be taxable?
An employee on lower rate SMP of £123.06 would pay no tax if on a Month 1 basis, but will get tax refunds if on a standard cumulative PAYE code. So they will actually receive more by SMP being taxable.
Yes - I know - if SMP wasn't taxable, employees could claim a refund of the tax deducted from their normal salary, but not until the end of the tax year and it is a bit of hassle.
Trade-offs?
I'd always thought of this weird anomaly as some kind of trade-off for the fact that the self-employed get none of the X weeks at 90%, Y weeks at 50% stuff which an employee would be receiving.
No
Statutory Maternity Pay at £123.06 a week for the employed is taxable; Maternity Allowance at £123.06 a week for the self-employed is not taxable.