Maternity Pay

[kanga]

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.

Touché. I'm a chartered accountant and chartered tax adviser and I know I'm right

 

[kanga]

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.

I agree that you're paying the right amount of tax. ie tax on the £400 (because that's your salary/earned income).

 

[Zuki]

It's just a pain in the arse, it'd cost them soooooooo little to include the previously untaxed amount and apply tax, but that's the way the cookie crumbles I guess. Still, it's better than crappy stat pay!

 

[sarah34]

Smp is calculated on your taxable earnings xxx

 

[HPmum2B]

Their way sounds correct to me.

The £100 is not taxable income its expenses, an expense is something incurred in your day to day job, for example your travel, client lunches, hotel accommodation etc (all depending what your job involves). These are not expenses that will be incurred when you are on maternity leave. If they were, you would be able to continue to bill for them and get them covered 100%.

Your income salary is the £400. This is what maternity pay is calculated on.

By claiming a proportion of your money as expenses and not salary, both you and the umbrella company are avoiding tax and NI on this money (please not I have said avoiding and not evading, big difference). Therefore on a day to day basis you see more of your money in your back pocket. However, this money is not seen as your salary.

 

[Zuki]

Wish I'd known I was going to get pregnant, I'd have opted to pay tax on the full earnings if I'd known they would calculate this way! lol!