maternity allowance and additional earnings disregard

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  • #44003
    j_duncan
    Participant

    I know it is an old chestnut, but, can a claimant who receives Maternity Allowance get the additional earnings disregard, If they receive the 30 hr element of WTC?

    I am under the impression they can but can not receive the earnings disregard.

    This raises it's head every so often and is always contreversial…

    #125031
    maz
    Participant

    For Tax Credit purposes, someone who is off work because of maternity, paternity, adoption or sick leave and in receipt of SMP, SSP etc are entitled to continue to claim Working Tax Credit and the 30 hour / disability elements, providing that they were receiving it prior to being on sick / maternity / adoption leave.

    Therefore, as long as HMRC confirm that they are still receiving the 30 hour / 50+ / disability element, you should continue to to award the £17.10 disregard (if applicable).

    #125032
    j_duncan
    Participant

    Thanks.

    Am I right in thinking they are not entitled to the earned disregard.

    #125033
    maz
    Participant

    no this still applies aswell – Statutory Sick Pay, Statutory Maternity / Paternity pay are classed as earnings for benefit purposes (HB Regulation 35, CTB Regulation 25)

    #125035
    j_duncan
    Participant

    Hi, but what if they get Maternity allownace not SMP?

    #125036
    Jon__Blackwell
    Participant

    If their earnings are too low or they don’t have any earnings then you can apply the AED to their tax credit instead.

    #125037
    j_duncan
    Participant

    Sorry I am not making myself clear. We have been told Maternity Allowance is not classed as earnings because it is paid by the state. SMP is classed as earnings because it is paid by an employer.

    Therefore, we have been told if a claimant receives Mat Allowance they are not classed as being in employment, therefore,no earnings to disrgeard it from hence not attracting the earnings disregard. Statutory mat pay does because this is paid by the employer. Both attract the AED if they receive the 30hr element of tax credits.

    #125041
    Jon__Blackwell
    Participant

    Sorry if I wasn’t clear.

    You are correct that maternity allowance isn’t earnings.

    They meet the criteria for AED via the WTC 30 hour credit (HB Regs Sched 4 para 17(2)(a))

    The maternity allowance (unlike SMP) is not earnings – so they have no earnings to apply that disregard against.

    However, Sched 5 para 56 allows you to disregard the same amount from their WTC instead.

    #125046
    j_duncan
    Participant

    thanks for you advice. 🙂

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