I am retiring from my medium -size business early next year as I have reached that time of life and I will be putting my limited company into volountary liquidation. My business has been quite successful over the last ten years or so of the Celtic Tiger . One outstanding issue I have is I have two long serving employees who have contributed enormously to my company's success over the years. Of course I intend to pay them redundancy plus a bit with it-say 6 week per year of service . However I understand that anything over the statutory rate is fully taxable to them. After so many years of outstanding service obviously I would like to re-imburse them as well as I possibly can. Can anyone advise me of any legal tax-reducing mechanism to optimise the benefit of any extra over I wish to give them.
Making long serving employees redundant
- Thread starter CRESPO
- Start date
Cant you make an ex-gratia or termination payment.
Tax exempt re €10,160 + 765 per year of service (plus another 10k if they have no pension)
OR
"SCSB"
Average of last 3 years pay X n/15 where n is the years of service
Either of these should cover them, talk to your accountant.
If your business is successful would you not try to sell it?, if you're over 55 then you would probably get retirement relief (no capital gains tax if sell for €750k or less, marginal relief if just over).
Tax exempt re €10,160 + 765 per year of service (plus another 10k if they have no pension)
OR
"SCSB"
Average of last 3 years pay X n/15 where n is the years of service
Either of these should cover them, talk to your accountant.
If your business is successful would you not try to sell it?, if you're over 55 then you would probably get retirement relief (no capital gains tax if sell for €750k or less, marginal relief if just over).
Thanks for that, Betsy Og ,
Are you saying that €10160 plus €765 per anum plus €10,000 can be paid tax free on top of statutory redundancy ?
Also when you mention extra €10,000 if employee has no pension is that if the employer has not made any pension contributions for the employee.Say the employee has their own pension taken out.
Can I do the following :
REDUNDANCY
€600 * 10 YEARS SERVICE*2 +€600= €12600
EX GRATIA PAYMENT
€10160
€765 *10=€7650
€10,000
TOTAL PAYMENT €27810 + €12,600 = €40,410
Reclaimable by Employer on Redundancy €7560
Total cost to employer €32,850
Employee gets €40,410 into hand
Would these figures be correct ? Appreciate any help.Cheers
Are you saying that €10160 plus €765 per anum plus €10,000 can be paid tax free on top of statutory redundancy ?
Also when you mention extra €10,000 if employee has no pension is that if the employer has not made any pension contributions for the employee.Say the employee has their own pension taken out.
Can I do the following :
REDUNDANCY
€600 * 10 YEARS SERVICE*2 +€600= €12600
EX GRATIA PAYMENT
€10160
€765 *10=€7650
€10,000
TOTAL PAYMENT €27810 + €12,600 = €40,410
Reclaimable by Employer on Redundancy €7560
Total cost to employer €32,850
Employee gets €40,410 into hand
Would these figures be correct ? Appreciate any help.Cheers
Yes-I've trawled the net and I think my figures are correct. Betsy Og or somebody else might confirm my figures :
http://www.citizensinformation.ie/c...ax-in-retirement/retirement_lump_sum_taxation
http://www.citizensinformation.ie/c...ax-in-retirement/retirement_lump_sum_taxation
Patrick777
Registered User
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Travel expenses and mileage ... fully legal. I'm sure they made some research trips or supporting the sales/account manager.
You could make them travel for a while!