Using personal tax credits against redundancy sum

Folks... I've just returned from Europe as I'm being made redundant by my Irish based employer. Since I've not used up any of my personal tax credits in this tax year, can I use this tax credit can I offset some of the tax liability on my redundancy lump sum. My employer says I can't which I find bizarre..

if you haven't read it already you should have a look at the Revenue booklet [broken link removed].

> Re: Using personal tax credits against redundancy sum

Thanks Clubman..yeah, I previously had a read over that document.. no reference in it on usage of your standard tax credits against the taxable portion of your lump sum.

Seems odd that I'm being told I cannot use my (unused)tax credit in this situation..

How can you not have used up any of your personal tax credits? Have you not been paid since the start of the tax year? If you were paid and taxed abroad in a country that Ireland has a double taxation with, I don't think you can just arrive back and start a tax year afresh. If you haven't been paid at all this tax year, could you ask your employer to pay you the taxable portion of your redundancy as a final month's pay (in Ireland) rather than as redundancy money? - it would then just be taxed as normal income.

OK - sorry the other stuff wasn't of any use. Following on from Pete's post I wonder if he's on the right track and that you were wondering if, because you hadn't used your Irish tax credits for the year to date, that you could use these to reduce your tax bill? As Pete says it doesn't really work that way due to [broken link removed] etc. which mean that you can't just appear "out of the blue" into a tax juristiction without your recent working/earning history (e.g. your earnings, tax paid and tax credits or equivalents received abroad) being taken into consideration. On the other hand, maybe you meant something else altogether and need to clarify your query?

> Using personal tax credits against redundancy sum

Pete... I work for an Irish company... but was seconded to the German office earning a German salary (and paying German tax).... thats why I haven't used my tax credits.

Re: > Using personal tax credits against redundancy sum

Your employer is right: you cannot use tax credits against Redundancy Lump Sum.

Redundancy Lump Sums are taxed according to the rules in IT21: Basic Exemption, Increased Exemption, SCSB, etc. Note that the Statutory Lump Sum is tax free.

Now, having said all that, your employer could pay part of the non-Statutory Lump Sum as normal salary, so as to use up any unused tax credits, and pay the balance as Redundancy Lump Sum. This arrangement may reduce your tax liability on the Redundancy Lump Sum, although employer and employee PRSI will be payable on the salary payment. Note that the Non Statutory Lump Sum is subject to PRSI under Table K, i.e. 2% Health levy on the full amount.

> Re: > Using personal tax credits against redundancy

Thanks Slash.... that clarifies the issue.