overpayment of tax on lumpsum?

K

kleenex

Guest
Hi there,

I recently received a lumpsum redundancy payment that I think may have incorrectly over-taxed.
The gross amount was €43,280 but I only received €28,570. I am currently waiting for former employers to send me a breakdown of their calculations as I am "almost" sure I have been taxed way too much.
I was employed for 8.5 years by them and have never received a lumpsum payment before.
I am also waiting on an RP50 form - will the breakdown of calculations be on this form?
Would it be worth my while contacting Revenue? Would/Should they have been notified of the payment.
Also, I have had no received no official notification of the payment - It just arrived in bmy bank account soon after I finished up.

Would really appreciate any help on how/where to chase up my "missing" money.
Many thanks in advance for your help.
 
It sounds a bit high but not by much. You get all the statutory tax free and 10k more. Your statutory is capped at 600 per week (x2) for every year worked plus one week so its about another 10k. So you will be taxed at the high rate (~50% after levies/prsi) on the remainder of 24k which is 12k. Of course if your weekly pay is less than 600 you would get less tax free. Also there may be something else like were you out sick for a long period at any time ? Here's a link to your statutory entitlements and how they may be affected over your period of work. You should get a form of your employer though which will give the exact figures. Remember to sign on immediately as you get UB only from when you apply as oppose to when you stopped working.
 
Assuming you haven't received another tax-free lump sum in the last 10 years AND that you didn't receive a tax free lump sum from an occupational pension scheme when you were made redundant, then I calculate the tax free amount to be €37,080.00, broken down as

€10,800.00 - Statutory (€600 x 2 weeks per year x 8.5 years + €600 bonus)

€26,280.00 - Increased Exemption (€765 x 8 full years PLUS €10,160 PLUS €10,000)

which means only €6,200 of the €43,280 is taxable at your marginal (highest) rate

Then as T McGibney states, this €6,200 will qualify for top-slicing relief

I would ask your former employer for a breakdown and also ensure that the figures are included on a P45 so that you can reclaim any overpayment of tax from Revenue.
 
Hi folks,
Thanks for the responses - the €37K is much closer to what I had roughly calculated myself. - I have to look into the Top Slicing relief - perhaps this will make up the difference.
Regarding the p45 - I have received that and it only includes what I actually earned this year and not the lumpsum. I didnt query it up to now as I thought my earnings and the lumpsum are sort of separate.
Looks like I will have to definitely make that call to Revenue and find out what details they have been given.
THanks again for your help. I need to get the finger out!!
K
 
DB74 said:
€10,800.00 - Statutory (€600 x 2 weeks per year x 8.5 years + €600 bonus)
Click to expand...

Isn't it the case that with regard to Statutory element calculation they only take the full years into consideration? - ie in this case it would be x 8 years.
 
no, for statutory redundancy they take all working time, not just full years, into account.

for the tax reliefs on exgratia payments, only full years are taken into account.
 
hi all, I am about to receive a redundancy payment for a very similar gross amount to the OP (slightly higher as I have 9 years service). In June 2001 I received an ex-gratia lump sum of about 3k from my previous employer with whom I was employed for 1 year.
I was wondering if someone could tell me how exactly this will effect the taxation of the lump sum I am about to receive and also what kind of net amount I should expect after tax?
many thanks in advance for any advice anyone can give me.
 
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