Thousands of mothers-to-be hit with maternity benefit cut

Charlie Weston, Personal Finance Editor

MATERNITY benefit payments face a cut in the Budget, in a move that is set to hit thousands of working mums.

The top rate is coming down, which will see some mothers losing €832 in payments, the Irish Independent has learned.

The higher rate is to be reduced from €262 to €230 a week. Most women on maternity leave get the top amount.

But some people on a lower rate of €217.80 will benefit as every working mother will now be paid €230 a week.

The change will affect around 8,000 women, and comes a year after the Government started to tax maternity payments for the first time.

The benefit is paid for 26 weeks, but there will be no attempt to reduce the number of weeks that the benefit is paid.

This is one of the longest period of maternity cover in the EU, experts said.

The Irish Independent has learned that both rates will now be "standardised" at ¿230 a week.

This will amount to a cut of €32 a week, for 26 weeks, for those who are due to get the higher rate of maternity benefit. The changes take effect from January.

Over the full 26 weeks, those due to get the higher rate will lose €832 in payments.

The change is expected to save the Exchequer €30m in a full year.

Taxing maternity benefit is costing some working mothers up to €2,700 in new tax payments.

Up to July, women did not have to pay any tax on the €6,812 of maternity benefit payments they got for six months after the birth of their child.

But from July 1, they have to hand back up to €2,700 to the Revenue -- because the payments are now taxed at up to 41pc from that date.

The Government justified the tax on the basis that some women were ending up with more in their take-home pay while they were on maternity leave due to the way the system was set up.

Many public and private-sector employers opt to give a "top-up" to boost the benefit payment, to ensure that a woman gets her full wages.

Tax was only paid on this "top-up" payment and not the combined total.

Now tax is due on the entire amount a woman gets on maternity leave.