I’m on maternity leave and got a bonus, how is it taxed?

Receiving a bonus while you are on maternity leave can feel confusing. You might wonder whether you are still entitled to it, how it affects your maternity pay, and most of all how it is taxed. I have spoken with many employees who panic when they see a lower than expected payment on their payslip and often it turns out the issue is not the bonus itself but the way PAYE taxation works during maternity leave.

In my opinion bonuses paid during maternity leave are one of the most misunderstood areas of payroll because they are processed through PAYE at a time when your normal salary is reduced or temporarily replaced by statutory maternity pay. This creates unexpected tax and National Insurance patterns that look wrong but are usually correct according to HMRC rules.

This guide explains exactly how bonuses are taxed while you are on maternity leave, why the tax deducted can appear higher than usual, how maternity pay interacts with bonuses, and what to do if you think something is wrong.

First things first: are you entitled to a bonus during maternity leave?

Many employees believe maternity leave affects eligibility for bonuses but that is not the case. Under UK law your employer must treat you fairly and cannot discriminate because you are pregnant or on maternity leave.

You must receive a bonus if:

• The bonus relates to work done before maternity leave

• The bonus relates to company performance

• The bonus is a contractual entitlement

• The bonus is part of an annual company-wide scheme

You may not receive a bonus for:

• Work you have not performed during maternity leave

• Attendance based bonuses

• Performance based bonuses covering periods you were not working

In my opinion the safest approach is to check your contract or bonus scheme rules. If the bonus is linked to performance or work done before your leave started, you are normally still entitled to it.

Does the bonus affect your maternity pay?

No. Your maternity pay is based on your earnings during your qualifying period, which ends before your leave begins. Once maternity pay has been calculated and your leave has started, a later bonus does not increase or reduce your statutory maternity pay.

Important

A bonus paid during maternity leave:

• Does not increase statutory maternity pay

• Does not reduce statutory maternity pay

• Does not change your qualifying week earnings

It is completely separate.

In my opinion this is reassuring for most people because they fear a bonus might impact their maternity pay entitlement. It does not.

How bonuses are taxed during maternity leave

A bonus paid during maternity leave is taxed in exactly the same way as a bonus paid when you are working.

How PAYE handles it

Bonuses count as earnings. This means:

• They are subject to income tax

• They are subject to employee National Insurance

• They may trigger student loan deductions

• They may push you into a higher tax bracket for that month

• They may affect pension contributions

• They are added on top of your maternity pay for that pay period

PAYE operates on a cumulative or non-cumulative basis depending on your tax code, so your monthly circumstances affect the figures.

Why this matters

Because statutory maternity pay is low, your bonus can shift your payslip from a small tax deduction to a large one due to the sudden spike in taxable income.

Why the tax deducted on a maternity leave bonus often looks higher

I have seen many cases where someone on maternity leave receives a bonus and feels shocked that the tax taken is higher than expected. There are a few reasons for this.

1. PAYE treats a bonus as if you are earning that amount every pay period

Even though your maternity pay is low, PAYE calculates income tax as if your bonus amount represents your typical earnings for the year.

Example

If you receive a £3,000 bonus, PAYE may temporarily treat this as part of your annual salary and tax it accordingly. This can push you into a higher tax band for that month.

You are often owed a refund later if the tax evens out across the year.

2. National Insurance is calculated per pay period

NI is not cumulative. It is calculated based only on that month’s earnings.

So if your monthly maternity pay is £700 but you receive a £3,000 bonus:

• Your NI will be based on £3,700 for that month

• This often results in higher NI than expected

In my opinion NI is usually the biggest surprise element because most maternity months show little or no NI deduction until the bonus arrives.

3. Student loan repayments may be triggered

If your maternity pay is too low to trigger student loan deductions but your bonus pushes your monthly income above the threshold, a deduction will be applied.

4. Pension contributions may restart unexpectedly

If you pay pension contributions as a percentage of salary, your bonus will trigger pension deductions unless your employer chooses to exclude bonuses.

5. Lower tax-free allowances may apply if you have a K code or previous underpayment

Any tax adjustments flow through the code, so a bonus will cause bigger deductions under a non-standard code.

Two different methods employers use to tax bonuses

Employers can process bonuses in two ways:

Option 1: Add bonus to your standard payroll (most common)

Under this method your bonus is added to your maternity pay and taxed through the standard PAYE rules.

This means:

• Tax is based on cumulative income

• National Insurance is based only on that month’s earnings

• Student loan deductions apply if triggered

This is the method most employers use.

Option 2: Tax the bonus as a separate payment (less common)

Some employers process bonuses separately as a one-off payment. This does not change the overall tax you pay across the year, but it can make the payslip appear neater.

It is still taxed through PAYE in the same way as your normal pay.

Worked examples

Example 1: Bonus taxed during maternity leave

Sarah receives £172 per week statutory maternity pay and no top-up. She then receives a £1,500 bonus.

Her taxable income for the month jumps from around £750 to £2,250. This triggers:

• Higher income tax

• NI deductions

• Student loan repayments if applicable

Her take-home bonus might look significantly lower than expected.

Example 2: Higher rate tax for the month only

Jessica receives a £4,000 bonus while on maternity leave.

That month’s earnings place her into the higher rate tax band even though her annual earnings will not.

Later in the year she receives a tax refund because she was not a higher rate taxpayer overall.

In my opinion this is one of the most common situations people overlook.

Example 3: Bonus paid into the following tax year

If your employer delays paying your bonus until after 6 April, the taxation falls into the new tax year which may benefit you if your maternity leave spans most of that year and your income is otherwise low.

Will I get a tax refund later in the year?

Quite possibly.

PAYE often deducts too much tax when a one-off bonus is paid during maternity leave. This is because PAYE assumes the bonus reflects your ongoing income.

Later in the tax year, once your income stabilises, PAYE recalculates and may refund you through your wages automatically.

If not, HMRC will issue a refund after the tax year ends.

In my opinion you should always check your tax position in your Personal Tax Account to ensure everything is correct.

What if I think the bonus has been taxed incorrectly?

You should check:

1. Your tax code

2. Your maternity pay calculations

3. That the bonus was treated as taxable pay

4. Your NI category

5. Any student loan deductions

6. Whether the bonus triggered pension contributions

Ask your payroll department to explain the calculations. If the numbers still do not make sense, HMRC can check whether your tax code is correct.

Important

Payroll cannot change your tax code. Only HMRC can.

What if my employer refuses to pay the bonus because I am on maternity leave?

This is potentially discrimination.

If the bonus relates to:

• Performance before maternity leave

• Company profits

• Contractual entitlement

Your employer must not disadvantage you because you are on maternity leave.

In my opinion you should always raise this formally if you feel a bonus has been withheld unfairly.

Does a bonus affect benefits during maternity leave?

Most maternity pay benefits are not affected by a bonus. However:

• Universal Credit may be affected

• Certain means tested benefits may adjust

• Council tax reductions may change temporarily

These depend on your household income for the assessment period.

Does a bonus affect SMP earnings threshold for the next maternity leave?

No. SMP for a new pregnancy is calculated from the qualifying period before that leave, not from later bonuses.

Does a bonus count as earnings for child maintenance?

Yes. Bonus income is included in taxable pay reported to HMRC. It may affect child maintenance calculations.

What if the bonus was earned partly before and partly during maternity leave?

Employers often pro-rate performance based bonuses. This is lawful if the bonus relates to work not performed during maternity leave.

In my opinion: the key things you should know

If I could summarise this topic in a few essential points, they would be:

1. You usually are entitled to your bonus.

2. A bonus during maternity leave is taxed exactly like any other bonus.

3. PAYE may deduct more tax and NI than you expect.

4. This does not mean you are being taxed incorrectly.

5. You may receive a tax refund later.

6. Your maternity pay is not affected by the bonus.

7. Your tax code is the key factor in understanding deductions.

8. Always check your payslip against your Personal Tax Account.

In my opinion the most common worry is seeing a large deduction and assuming it is wrong. It is usually just how PAYE treats irregular income.

Final thoughts

Receiving a bonus while on maternity leave is a great financial boost but it can create confusing payslips. Bonuses are taxable earnings and are processed through PAYE alongside your maternity pay which means the deductions can look higher than normal. This is often correct and happens because maternity pay is low and bonuses temporarily increase your taxable income for that pay period.

In my opinion the best way to understand your bonus pay is to check your tax code, review your payslip carefully and compare it with HMRC’s records. If anything looks incorrect, ask payroll to explain it. Most issues are easily resolved.