Redundancy and Tax

D

dwalsh

Guest
Hi all,

Hopefully someone will be able to shed some light on the below.

I have been working for the same company for the past three years and it looks like I may be made redundant shortly. I have previously been made redundant at the end of 2005 and recieved only statutory redundancy at that time. If I was too be made redundant now and say I get 5 weeks pay per year of service, what amount of this would I be taxed on.
 
It depends on the amount of the payment. Any statutory redundany included in the payment is tax exempt. For amounts over and above the statutory payment the following amounts can be exempt:

1) The basic exemption of €10,160 plus €765 for each complete year of service; or
2) The basic exemption can be increased by €10,000 if you are not a member of occupational pension scheme or give up your right to receive a lump sum from the scheme. This increased basic exemption can only be claimed once every 10 years and approval must be given by Revenue for payment to madetax free;or
3) Instead of the above two option, if it works out better, the tax free amount can be calculated using the Standard Capital Superannuation Benefit (SCSB). The SCSB normally works out best for those with long service and high pay. The formula is

AXB/15 - L where A = 1 years average remunaeration for the last 3 year, B=number of complete years service and L = tax free pension lump sum received or receivable
 
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