Claiming Tax Back after redundancy

Lan

Registered User
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I've been told by a colleague that if you are made redundant you are entitled to claim all the tax back for the year you were made redundant. Is this true? I am being made redundant soon and don't know the tax implications.
Advice Appreciated.
 
Rdundancy is a complex issue. There may well be tax refunds and these depend on a number of issues involving the lump-sum calculation and issues such as pension lump-sums etc. and these can involve tax refunds of years before redundancy also. But there isn't an automatic right to a refund of all of the tax you have paid in the year of redundancy just by virtue of a redundancy itself. You should make sure that you get all the relevant papers on redundancy and I'd advise letting a tax consultant go over them to see what tax you may be entitled to.
 
Lan,

he is correct, jan of next year, write a letter to the revenue saying that you would like to claim top slicing relief as you were made redundant on.... 2007 and include your P60 from 2007.

Depending on the package you were offered, you should get a certain amount back....all about the amount of tax you have paid in 2007 compared to the previous 3 ( not sure) years...
 
Legend, that is NOT correct, you do not get back ALL of your tax paid for that year.

Your tax for the year is based on your taxable income less your allowances and credits. If you are made redundant in February and don't work for the rest of the year, the odds are that you will be due all the PAYE you paid back. However, the later into the year you work (or if you get a job after your redundancy) the more likely it is that you will only be due a small tax refund.

However, there are a couple of things to bear in mind.

Firstly, any statutory redundancy payment is entirely ignored for tax purposes. You don't pay income tax or PAYE on it.

If you receive an ex-gratia lump sum, a good chunk of this will be ignored for tax purposes (the amount depends on how long you've worked there, salary etc). To the extent that the lump sum is subject to tax, you pay PAYE and Health Levy only (no normal PRSI).

If you have a taxable lump sum, you will probably be entitled to "Top Slicing Relief". This means that if the rate of tax you pay on the taxable bit (which for most people would be 41%) is more than your average rate of tax for the last three years (which, taking account of the 20% rate, would be true of most people) you will be refunded the amount of tax paid on the taxable lump sum over that average rate.

Your best bet is to submit your P45 and last three P60s to the Revenue at the end of the tax year.
 
nige,

i didn't say that he would get ALL his tax back but a certain amount!!!!
 
nige,
i didn't say that he would get ALL his tax back but a certain amount!!!!

OP said :-

I've been told by a colleague that if you are made redundant you are entitled to claim all the tax back for the year you were made redundant. Is this true?

You said

Lan,
he is correct,

and later

you should get a certain amount back....all about the amount of tax you have paid in 2007

AS Nige and I already said this is not necessarily correct.
 
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