Maternity benefit is a non taxable income as it is taxed through your standard rate cut off point (SRCOP) and your tax credits (TC’s). There are a couple scenarios that may arise when you have an employee going out on maternity leave.
• Firstly Revenue should always be informed when an employee is going out on maternity leave as a new P2C Tax Credit Certificate will need to be issued for this employee
• If the employee is receiving the standard €230 a week into their own bank and you don’t top up their wages all you will need to do is zeorise their weekly pay and put them on a Week/Month One Basis.
• If the company receives the benefit but doesn’t top up their pay you will have to zeorise their weekly pay and go in to the additions tab and under non-taxable additions add the description maternity benefit and input the €230 in this section.
• If it is company policy to top up the wages and the company receives the maternity benefit you will need to reduced the weekly pay by the €230 and go in to the additions tab and under non-taxable additions add the description maternity benefit and input the €230 in this section.
• If the company doesn’t receive the maternity benefit and tops up their wage all you will have to do in this case is reduce the weekly pay by the €230.
Maternity Benefit is taxed through the SRCOP and TC’s a new tax credit certificate will be issued for this employee when they go out on maternity leave and it is normally calculated as follows;
€230 X 26weeks = €5,980 the SRCOP is then reduced by this amount i.e. Average annual Cut Off Point; 32,800 – 5,980 = 26,820 this is now the new annual SRCOP
€5,980 X 20% = €1,196 and the Annual TC’s is then reduced by this amount i.e. Average annual tax credit; 3,300 – 1,196 = 2,104 this is now the new annual TC’s
And the new cert is then issued on a Week/Month One basis for the remainder of the year.