Training Grants as part of redundancy package, tax treatment and associated questions

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Sunny

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Been hearing recently about training grants being given to employees who are being made redundant as part of their severence package e.g. BOI/Ulster bank etc. Does anyone know what the tax treatment of this is? I can't find anything on revenue but I presume they are tax free?

Curious to know if I can ask for part my upcoming package to be paid in this form if I decide to retrain.
 
I had that included in a redundancy package and it was lumped into final figure and tax calculated on total, just double checked the paperwork and it says retraining grant was included in total and taxed accordingly so doesn't seem to be any exemption.
 
There are already quite generous tax reliefs around redundancy payments (statutory redundancy isn't taxable, standard exemption of 10,160, increased standard exemption of 10,160 + 765 per year of service, top slicing relief).

When I took redundancy a few years ago, my plan was to use the money to go back and do a masters, and I kind of figured that was the point of the income tax exemptions - you're being allowed to be given enough money tax-free to get yourself retrained (or set up a business of your own, or emigrate etc...).
 
I know the tax treatment is generous. Was just wondering why a training grant seems to be mentioned separately in the packages announced.
 
Sunny said:
I know the tax treatment is generous. Was just wondering why a training grant seems to be mentioned separately in the packages announced.
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I'd imagine it's because it is additional to the statutory and ex-gratia amounts.
 
It's just a way of bumping up the payments without having it show as the 'weeks per year of service' part of the calculation. Staff not there that long will do better if it is classified as training grant or per child or whatever.
 
OOPS! It turns out there was a change introduced in the Finance Act 2008; it allows up to €5k of retraining costs to be covered by the employer tax-free as part of a redundancy package, in addition to the other normal tax-free amounts.

[broken link removed] (page 22, Section 201(1)(A)):

(1A)(a)
The first €5,000, of the cost of retraining an eligible employee, is exempt from tax where, as part of a redundancy package, an employer makes retraining available to all eligible employees.
[FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman](1A)(b) [/FONT][/FONT]​
The exemption is not available on the cost of training a spouse, civil partner or dependant of an employer.
[FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman](1A)(c) [/FONT][/FONT]​
The exemption is not available if an employee receives the cash or money’s worth in lieu of the employer providing the retraining.
 
Does that mean though that the employer actually organises the retraining? All ours was paid in cash to us with the redundancy payment, we did not have to provide proof that it was used for training or anything like that.
 
wbbs said:
Does that mean though that the employer actually organises the retraining? All ours was paid in cash to us with the redundancy payment, we did not have to provide proof that it was used for training or anything like that.
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That sounds a bit dodgy alright, but if the total amount was within the normal exemption limits anyway there wouldn't be a problem...
 
wbbs said:
Total was not within exemption limits and it was taxed.
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Oh, it WAS taxed (I thought you were saying it wasn't taxed)!

It has to be taxed unless the employer actually provides the training, as per the final sub-paragraph of the link I quoted earlier. Otherwise it's just a way to bump up the tax-free cash lump sum.
 
That's what I thought alright, I knew it was just a way of bumping up lump sum for those with short service.
 
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