Tax on Redundancy

My Wife is being made redundant in about 4 weeks and has beed given an estimate of new redundancy payment as follows .

Redundancy =€34500
Tax exempt amount €31000
Taxable amount €3500

Firstly how much tax and prsi is she going to pay on this taxable amount and is there any way to reduce or eliminate the tax she will pay.She has been told that she can apply to the revenue for an increased exemption of €10,000 but that it might affect any tax free lump sum from her pension in the future and the revenue seems to be very vague on whatb exactly this means.Another option I have heard of would be to pay this taxable amount of €3500 or at least some of it into her pension as an AVC before she leaves the company.Once she leaves the company she will be making no further contribution to this pension scheme .

Any advice

Have you already seen this Revenue booklet?

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Anything useful on the DETE site?

ballybrone said:

Once she leaves the company she will be making no further contribution to this pension scheme .

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Doesn't matter. She can leave the money invested in the scheme, transfer to another occupational scheme (now or later) or transfer to a pension retirement/buy out bond.