Maternity Pay

[Zuki]

Does anyone have any experience of claiming maternity pay through an umbrella company in the UK? I'm not convinced my maternity pay is being calculated correctly!

 

[Wannabe Mommy]

No sorry but didn't want to read and run. Do you not have a maternity policy that clearly lays out your entitlements dependant on years in service?

Mine says after 1 year continuous service prior to 26th week of pregnancy you get enhanced company may pay before that it is SMP

 

[Zuki]

I get six weeks at higher rate, then the rest at SMP. The problem is the way my umbrella company work out the first rate, it just doesn't make sense to me, and I'm an accountant!!

 

[stomp110]

Google work out SMP for employees... it shows you everything your boss/work would see

 

[Zuki]

It's a debate over which portion of my weekly pay they base my maternity pay on. Basically they normally take the amount I've billed for the week, then deduct their portion, deduct my expenses for the week, calculate tax on the lower value and then add the expenses back on again to give my final pay before tax.
They're saying they base maternity calculations on the value after deductions but without adding the expenses back on, which seems screwy to me.

 

[Popples1]

Yes, I work through an umbrella and apparently get 6 weeks @ 90% of my income then 33 weeks SMP. They calculate the 90% based on a qualifying period which is 15 weeks before your due date. I'm waiting to hear what mine comes to...

 

[Popples1]

Just seen your other post. Will let you know what they say to me re: calcs. I suspect we work for the same umbrella...

 

[kanga]

Makes sense that you don't get mat pay on the expenses to me.

Have they calculated your mat pay on the same amount that normally gets taxed?

 

[Zuki]

Makes sense that you don't get mat pay on the expenses to me.

Have they calculated your mat pay on the same amount that normally gets taxed?

They don't actually pay me expenses, my expenses is how much I have spent on travel and food that week and they deduct it from my taxable amount before then adding it back on again. So it's not like I claim £100, and get £100 on top of what hours I've billed. If I bill £500 and have £100 in "expenses", I get taxed on £400 and then have the £100 added back on to the final value.

Does that make more sense?

 

[kanga]

Oh ok. Have they based your mat pay on the £400 rather than £500?

 

[Zuki]

Oh ok. Have they based your mat pay on the £400 rather than £500?

Yeah basically. I was expecting it to be based on the £500 and then taxed as per usual.

 

[kanga]

I would think that if you're usually taxed on the £400 then that is your actual salary. Not the £500. Expenses aren't earned income and I'm guessing that as the umbrella company are paying you mat pay, then you're a deemed employee.

 

[Zuki]

My expenses are earned income because they don't reimburse me for my expenses, they simply don't tax my expenses. So if that £100 is train fare they don't pay me back £100, they simply reduce my earned income by £100, tax everything else and then add the £100 back on. It's all part of the hours I've billed, no additional payment on top.

 

[Pearls18]

That sounds so confusing I can understand why you're confused! The only example I can think of, if you were for instance going to apply for tax credits those "expenses" wouldn't be classed as income because it isn't taxable therefore you would have a reduced income compared to what you actually have so in this example it would work in your favour. Because it is a form of non taxable income I would assume it isn't eligible to be put towards your SMP income if this makes sense??? If it was taxable I would definitely say it should be included, but as it isn't I can imagine it's not? Do you have a contract which states these kinds of things? I don't understand how it can be classed as income if it isn't taxed, unless I've gotten confused, which I have lol.

 

[kanga]

They reimburse your expenses by adding them on to your taxed pay. Your salary is the £400 per month.

If your salary were the £500 then you've been underpaying income tax.

 

[kanga]

Also you won't incur expenses on mat leave.

 

[Zuki]

If your salary were the £500 then you've been underpaying income tax.

Sorry, but wrong. I'm an accountant, trust me, I know how much my tax should be. Their way isn't wrong per se, it's just cheaper for them, and I lose out a bit.

 

[Pearls18]

If your salary were the £500 then you've been underpaying income tax.

Sorry, but wrong. I'm an accountant, trust me, I know how much my tax should be. Their way isn't wrong per se, it's just cheaper for them, and I lose out a bit.

If you don't pay taxes on these expenses, income whatever you want to call it I don't understand why it would be factored into SMP. You said yourself you're an accountant and you're confused so if someone is trying to help there's no need to be rude, the way your system works sounds a little strange, either something is an expense in which case you don't pay tax on it but it isn't income and won't be in your SMP, or it is income in which case it needs to be taxed and it'll be classed as income for your SMP, you can't have it both ways and not pay tax on it but suddenly have it classed as income for SMP. And as the PP said you won't be incurring expenses during maternity leave anyway so why would it be classed as your income when you're not needing trains etc when taking SMP. I'm not an accountant but that's the way I understand it, all you can do is ask the people that worked it out for you.

 

[Zuki]

I wasn't rude, I just said I knew I was paying the right tax. I was just wondering if anyone else had an experience of MP through an umbrella company because I wasn't sure if it was my lot calculating it this way or all umbrella companies.

 

[Miss_Cellany]

I think smp is only based on earnings that are subject to national insurance deductions so if you don't pay these on the expenses part then the expenses part wouldn't qualify