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Is maternity allowance taxable?

Is maternity allowance taxable?

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and should it be entered on the SA return?
Diane

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Euan's picture
By Euan MacLennan
08th Jun 2009 12:38

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.

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By geoffemtacs
08th Jun 2009 12:22

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.

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By Accounting WEB
08th Jun 2009 11:04

Thanks Euan, that's as I thought............
It just seems odd that one is taxable and the other not?

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Euan's picture
By Euan MacLennan
07th Jun 2009 17:30

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.

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