Income levy/PRSI payments on Redundancy?

[Demps]

Hi

Have shown interest in voluntary redundancy at work, received the figures and have the following questions:

Taxable amount has been calculated to be 54,007, deductions are:
Tax at 41% - 22,143 (fair enough)
PRSI at 5% - 2,700
Income levy at 6% - 3,240

Are the latter two correct an extra 11% on top of normal tax seems very harsh - looking at revenue website says PRSI is not reckonable

Anyone know the answer

thanks

 

[puneetb11]

Hi,

1. Taxable lump-sum is taxed at higher rate of tax i.e. 41% at the time of payout but you can claim a refund on it at the end of the year. Rate applicable is the average rate of tax for the last three years (relief is called top-slicing relief)

2. You can also claim a refund on PRSI at the end of the year by taking into consideration the earnings for the entire year.

3. Same with Income tax levy. Depending on your income for the full year, you would be able to determine which band is applicable to you. At the time of payout, PRSI and levy is charged at highest rate as the payroll process assumes this income to be your period income and assumes that it will be the same for remaining period of the year.

HTH,
Puneet

 

[Demps]

Thanks puneetb11 - helps clarify it a lot

1. Do You know should I be paying PRSI on a redundancy lump sum at all

Thanks