Introduction
Maternity Benefit, along with Adoptive Benefit and Health and Safety Benefit (including any increases for dependents), is liable to PAYE. These payments are not subject to Universal Social Charge (USC) or Pay Related Social Insurance (PRSI).
The Department of Social Protection (DSP) provides Revenue with details of Maternity Benefit payments. Revenue collects the tax due by reducing the employee's annual tax credits and rate band on a weekly basis. This adjustment is based on a notional annualized amount calculated from the weekly Maternity Benefit payment.
Maternity Benefit received is on a 'Week 1 basis,' meaning the adjusted tax credits and rate band are applied weekly. If the maternity leave spans two tax years, Maternity Benefit payable in the second year is taxed cumulatively from the beginning of Year 2. The RPNs reflect this.
Employees should pay PAYE, PRSI, and USC on any top-up payments from the employer above the statutory weekly payment.
Using Quick Setup to set up Maternity
You can use the Quick Setup facility to set up Maternity
Select the Employee you wish to set up Maternity for in the Employee Screen. At the top of the screen, click the Quick Setup button
Enter the amount of Maternity
In the Quick Setup Dialogue tick 'Taxable Statutory Maternity'
A section will appear where you can enter the amount of Maternity the employee getting per pay period. Note that the employee may be getting a weekly payment, so (for example) if they are monthly paid in Cloudpay, you may have to convert the weekly amount to the equivalent monthly total.
If the employee is paid paternity directly from social welfare and they are not forwarding the payment to their employer, click the 'Employee Kept Maternity Cheque', otherwise make sure that 'Employer Kept Maternity Cheque' is ticked.
Click 'Save' to save the amount
Entering directly into the elements grid
If you have used the Quick Setup utility, notice that it has created a new element in the Employee Elements grid.
You could have also entered the details directly into the Elements grid without using the Quick Setup facility.
Note that:
- The Type column is Maternity
- PAYE, PRSI and USC columns are all unticked
If you entered the details directly into the grid, do not forget to click Update Employee to save it.
Even though Maternity is liable for PAYE, note that the PAYE column is still unticked. This is because Revenue will tax the maternity by issuing a new RPN with adjusted tax credits/standard rate cut off point.
Employee Kept Maternity Cheque
If the employee kept the Maternity payment issued by the Department of Social Welfare, then a deduction will also be set up.
If you used 'Quick Setup' and ticked 'Employee Kept Maternity cheque' then this deduction will be automatically set up.
The employee should not also be paid the benefit by the employer as well as keeping the Social Welfare payment, so we need to put in the deduction.
Topping up Maternity Pay
Sometimes the employer may 'Top Up' the payment, maybe to meet contractual obligations.
To do this, add another element by entering it directly into the Elements grid. Make sure that PAYE, PRSI and USC are all ticked.
Grossing up
If the employer wishes to 'Gross Up' the top up, then tick the G.Up column for the top up in the elements grid. 'Gross Up' means that the amount is Net pay rather than Gross pay, ie, the amount is 'after tax'
