Salary top up whilst on maternity leave

J

jennifer999

Registered User
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16
Hi,

Ive been advised by my employer that they will pay me my full salary whilst on maternity leave (Yipee!!!)

Am i right in saying thats it more tax beneficial for me to retain the maternity state benefit of €280 myself and just have my employer pay me the difference?

Ie) My gross salary is €530 per week less €280 benefit = €250 gross which I should pay little or no tax on? Therefore getting my standing order changed to this €250 less tax instead of my normal weekly wage.

Thanks
 
jennifer999 said:
Ive been advised by my employer that they will pay me my full salary whilst on maternity leave (Yipee!!!)

Am i right in saying thats it more tax beneficial for me to retain the maternity state benefit of €280 myself and just have my employer pay me the difference?
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If your employer is paying full salary then do you not get both 100% salary plus MB (exempt from tax)? :confused: Or do you mean that they are paying you 100% salary minus MB? Or are they paying you 100% salary and asking you to repay them the MB?

The key thing is that MB is exempt from income tax while income is not obviously.
 
What I was saying is that my employer will pay me my salary whilst on maternity leave and I should transfer maternity state benefit to him and therefore continue to receive my standing order each week as normal. This is what happened on my 1st child.

HOWEVER I was recently advised that I could have saved tax if I had kept the state benefit (now €280 per week) and asked him to pay me the balance (my gross less state benefit and the balance taxed as necessary but should be very little or nothing ie €530 - €280 = €250 gross which is then taxed as my weekly income)

So going into my account should be €280 per week from state plus the €250 less tax from my employer

What I normally get is €465 per week, so if Im below tax threshold on €250 per week i'll come in with more?

Does this make sense?
 
Your employer will probably deduct the mat leave benefit from your salary - the depat of welfare advise of the amounts that should be deducuted to take into account tax etc.

Some ask that you repay the employer the amount you get from social welfare directly to them.

So I'd ask the employer what their policy is.
 
Aren't state benefits taken into consideration for tax purposes? I thought they were only "tax-free" when within the thresholds.
 
Employer dosnt really have a policy.

All I know is that 1st time around I continued to received my normal salary (taxed on whole salary) and my employer reduced his payroll records by the €280 benefit from the state so my P60 showed lesser income therefore I was not eligble to reclaim tax from revenue. So Im not letting it happen this time around.

So all I need to know is if keeping the €280 myself and him paying the balance (calculated on the €250 gross which should mean 0 tax???) is right?

Thanks
 
A lot of people go on mat leave here and we pay full salary less the social welfare amount from their salary. I haven't heard anyone say they were better off when they were on mat leave.
 
This is how im figuring it out:

My gross salary is €530 per week therefore my net is €465.69 per week.

Whilst on maternity leave the state will pay me €280 per week which is tax free!!! Therefore if my employer is topping up my wages and ensuring I receive a full wage whilst on maternity they should factor the following:

Gross wages €530 less state benefit €280 = €250 gross wages to be covered by employer and this is all I have to pay tax on as opposed to the full €530.

So I THINK tax on €250 per week is €0 or only a few euro so ....... if I get state benefit paid to my account (€280) plus employer changes my standing order to €250 or little less i should receive €530 or thereabouts per week as opposed to €465.69.

If I transfer my state benefit to employer i will continue to receive €465.69 per week and he'll reduce his payroll by the €280 benefit therefore showing on my Payslip and P60 as earning €185.69 per week. So he gets the relief on tax on his side but when I go to claim over paid tax back (on the €280 portion of my wages) the revenue will tell me "you P60 dosnt show you as receiving a wage of €530 GROSS and paying tax on same.


Has anyone out there been in this position and know what Im talking about or am I just confused!!!!!!
 
jennifer, have been in this position with my employer who topped up % of salary and left the state benefit to be paid independently, i.e I didn't have to reimburse employer. Your understanding is correct, state benefit is tax free and you benefit from paying from less tax on top up of your salary from employer. Money which obviously comes in very handy at this time.
 
It should be stated clearly in your employment how employer pays you during maternity leave. Usually if employer pays in full during maternity leave your State Maternity Benefit will be paid to your employer and you would have signed your contract agreeing to that.

Payroll will factor in the non taxable Maternity Benefit and tax the remainder accordingly.
 
Stifster said:
Aren't state benefits taken into consideration for tax purposes? I thought they were only "tax-free" when within the thresholds.
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Many are. Some (such as MB, Child Benefit, Early Childcare Supplement etc.) are tax free.

In relation to the original query and as already mentioned I think - you would be better off keeping the MB and getting salary minus from the employer than getting full salary and paying the MB to the employer. The first case is more beneficial because you get the MB tax free. In the second case you are not getting any of your salary tax free.
 
Thanks folks, thought I was on the right track!

I know that if my employer did it correctly it wouldnt matter which way I did it as I should be paying less tax. But 1st time around he made sure his tax liability was reduced but mine continued as normal
 
jennifer999 said:
But 1st time around he made sure his tax liability was reduced but mine continued as normal
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How long ago was the first time? Could you go back to revenue with payslips showing that your wages were actually cut during your previous maternity leave?
 
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jennifer999 - If on your last mleave, you received the same net pay, then all you have to do now is contact revenue for a p21 for that year/years (as long as its not too long ago). They will send you a balancing stmt and you will be able to claim for the overpayment in tax. If you phone revenue, they will be able to tell you what you need to do and I usually find them very helpful.
Regarding Full pay on mleave - some employers will continue to pay your full gross while others will just make sure that your net remains the same. You need to find out which option your employer goes with.Hope this helps.
 
Don't forget that if your employer is topping up your maternity pay they are quite entitled to only top up the net amount to you - e.g. if your net pay is €465 a week and you decide to keep the MB of €280, your employer could make a net payment to you of just €185 a week.

It will all depend on how they operate. If I owned a business and was paying maternity pay, I would certainly choose the option that cost the company the least - i.e. pay difference in net pay or have the MB signed over to me and pay the entire salary but putting the €280 in non-taxable income therefore costing the company less.
 
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MsGinger said:
Don't forget that if your employer is topping up your maternity pay they are quite entitled to only top up the net amount to you - e.g. if your net pay is €465 a week and you decide to keep the MB of €280, your employer could make a net payment to you of just €185 a week.
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Are they entitled to top up only to the net amount? Under what legislation?
 
Joe1234 said:
Are they entitled to top up only to the net amount? Under what legislation?
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As employers are not obliged to provide any remuneration at all during maternity leave, any top up provided is subject to the employment contract and/or the employer's discretion.
 
Nige said:
As employers are not obliged to provide any remuneration at all during maternity leave, any top up provided is subject to the employment contract and/or the employer's discretion.
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Of course it is discretionary, so if the employers policy was to top up only on a net pay basis, then there is nothing stopping the woman transferring any transferable tax credits to her husband, and still coming out with the same net pay, costing the employer even more, especially if the employer does not notice that she has done it. Assuming, of course that she is married, on joint assessment, and earns enough to make an impact on her paye, by just having the paye credit.
 
When I was on mat leave in 2006, my MB was paid directly to my employer and I got my full salary as usual. When I returned to work I got a letter from my emplyer stating that this is how it worked, which I sent to Revenue and I got a nice cheque refunding me the tax that I had paid on my MB. As far as I know plent of people do it this way. You could probably still get a refund for your previous MB payments.
 
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