No tax payable on redundancy

[PaddyW]

Just trying to do quick calculation on a redundancy payment.

Employee has worked at company for 11.5 years. Redundancy payment is 2 weeks per year of service on top of statutory. I believe statutory redundancy is tax free.

So going on a weekly wage of 807.00 euro are my calculations correct.

23 weeks at 807.00 = 18561.00

Basic exemption = 10160.00

Plus 765.00 per year of service (765 x 11.5) = 8797.50

10160.00 + 8797.50 = 18957.50 tax exempt.

I think this means no tax is payable, as employee has not received any previous redundancy payments. Am I correct?

 

[Nige]

Not quite, the calculation of the basic exemption is €10,160 plus €765 for each full year of service, so it is €10,160 + (€765 * 11) = €18,575.

As this is still higer than the expected ex-gratia payment, you are right to say there is no tax on any of the redundancy payment.

 

[PaddyW]

Ah, it's full year of service. Thanks for clearing that up for me Nige, much appreciated.