Maternity leave and refund of tax

[PatrickDub]

A friend of mine emailed me regarding maternity benefit. She (and I) are lost as we've heard varying answers.

What she is trying to figure out is how much tax will be due back to her by the end of this year, if any.

She will be finishing up work mid June and will be off for the remainder of the year.

During that time, she will receive no salary or contribution from employer. However, it is likely that she will continue to receive her car allowance, which get's paid into her monthly salary. It's her car but they make a contribution each month towards the running of it.

When does apply for this? Does she need to wait until the year is out, or can she apply in June following her last pay-check?

Thanks a million

 

[cdaly]

Hi PatrickDub
The tax credits and 20% standard rate cut-off point for a year is given on a cumulative basis. This means that by the end of June, she will have been allocated 6/12 of her annual tax credit and standard rate cut-off point. She will be entitled to the remaining 6/12 of her tax credits and standard rate cut-off point over the following six months.

Assuming that she is entitled to a personal tax credit of €1830 and a PAYE credit of €1830, she will be entitled to get up to €1830 in tax back over the following six months (the actual amount will depend on her salary and tax already paid).

If she continues to receive the car allowance from her employer, a portion of the tax credits will be allocated to this payment and any unused credit will be refunded to her through her payroll so that by the end of the year all tax refunds she is entitled to will have been repaid.

Any refund of tax based on the standard rate cut-off point will be dependent on whether she has been paying tax at the higher rate of 41% up to now.

If it turns out that she will not be receiving the car allowance from her employer, she should request that her employer puts through a nil pay for her while on maternity leave which will trigger a repayment of tax to her each month through the payroll.

As the maternity benefit received from Social Welfare is not taxable, this payment does not need to be taken into account. I have also assumed that she has no other sources of income in the year.

I hope this helps.

Celine

 

[paulpd]

Thank you very much Celine, much appreciated!

 

[cdaly]

Your welcome.

 

[Town]

A similar query from me. A friend of mine is on maternity leave as a primary teacher and also receives the state benefit as she is on AI PRSI. Is this correct. It seems like a major anomaly receiving two state payments.

 

[huskerdu]

A similar query from me. A friend of mine is on maternity leave as a primary teacher and also receives the state benefit as she is on AI PRSI. Is this correct. It seems like a major anomaly receiving two state payments.

Can you explain what you mean ?
Do you mean that she is receiving Maternity Benefit and she is getting top up pay as well ?

 

[Protocol]

The DES pays her wage and the DSW pay he maternity benefit. Very common.

The employee pays the MB over to the employer.

 

[Town]

She doesn't pay over the DSW payment to her employer. She also received this payment during her previous maternity leave. Her tax affairs are all in order as well.

 

[txirimiri]

She doesn't pay over the DSW payment to her employer. She also received this payment during her previous maternity leave. Her tax affairs are all in order as well.

That sounds very odd. Are you sure she isn't receiving statutory amount from DSW and then top up from her employer? Or is she saying that she recieves her full salary from her employer PLUS the statutory amount from DSW? I am a public servant and the standard in the public service is that you receive the same salary on maternity leave as you do while working (either via one payment from your employer who then recoups the statutory payment from DSW or via direct statutory payment from DSW and top up from employer). You have to fill in a specific form for maternity benefit in which you specifiy whether the DSW payment should go top you or your employer and your employer should amend payroll accordingly. Otherwise she would be getting paid more on mat leave than while working!