redundancy payment to spouse

[carrs]

I have to make my spouse redundant. I was just wondering if I make a redundancy payment to her will this be tax free as per standard arrrangements or will it be taxed the same way we get shafted on the PRSI contributions.

Thanks for anyone who can help

 

[Eldorado]

Only employees who were in insurable employment are entitled to redundancy. If your spouse was not on PRSI class A she is not entitled to statutory redundancy

 

[censuspro]

Assuming that your wife was an employee of the business then yes she is entitled to the redundancy/termination payment however you may not get the 60% statutory refund from dept enterprise trade and employment.

Another thing to watch out for is that the universal social charge (USC) ,which replaced the prsi regime in the last budget, applies to redundancy payments that are in excess of the tax free redundancy payment. Depending on how much the redundancy payment is you may want to make your wife redundant as of 31 December 2010.

 

[carrs]

thanks for replies.
Eldorado when you say statutory redundancy do you mean the money you can claim back from the state. What about if the business just pays it and doesn't claim it back? Can it be claimed as a legitimate business expense?

census - I don't think the amount will be more than the tax free threshold but thanks for advice.