Redundancy payment - advice needed re no tax deductions on salary or ex-gratia payments

A

Amarach1975

Registered User
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I took voluntary redundancy from my company 2 weeks ago. Ex gratia payment (aside from statutory) is 25k.

I was there just over four years, and joined the pension scheme after one year (it's a standard defined contribution, I paid 5%, they paid 5%. I'm 42.

I got my P45 today. They deducted PRSI and USC on the normal half month salary. However they deducted no tax on the salary or the ex gratia redundancy. However the P45 hasn't done anything to call out the taxable lump sum - it's put all my earnings year to date as taxable.

So 2 questions. I know the basic exemption is 10,160 plus 765 *4 for my service. I'm less clear on how the potential increase in 10k works. If you are in a defined contribution scheme is it automatic that there will be potential present day value? I don't remember the paperwork I signed when joining saying anything but it's buried upstairs somewhere.

If I ring the pension providers tomorrow, can they give me a value quick enough? My company outsource the payroll function. So once I have my tax free exemption worked out I'll have to email them and ask them to reissue the P45 with correct details?

I have started a new job, and I know if the P45 goes in saying my taxable pay is way more than it is and it looks as I haven't paid tax on it, I'll be fleeced. And we have earmarked the money for doing some major house renovations so I really don't want to start planning it until we know for sure how much the revenue is due.

Many thanks

(I know there is a SCSB alternative calc but I think that only works if you are a super high earner with years of service which I wasn't).
 
It will have to be calculated by the actuary so you won't get it over the phone unless he has already been asked to calculate it.
It will be quite small though.

If you want to estimate the NPV for your own rough idea:

Take your average salary for last 3 yrs, X 3/80 X 4yrs then discount back this at around 6% for 23 yrs.

(discounting means dividing by 1.06, 23 times )

So it looks like you will be getting most of the 25k tax free.
Parts 3 and 4 of the P45 should show the taxable amount.

You could ask your tax office to put you on a week 1 basis until you are happy with the P45
 
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Thanks JoeRoberts. And just a thought, I never merged my pensions but I have a small one from a job from 2001 to 2003 and a UK pension from my time in the UK so would I have to add all three together?
 
no just this employment

and NPV is based on salary and yrs of service, not the value of the fund.
 
Much appreciated. I'll ring the pension providers tomorrow and see when they can get the info out to me.
 
You really need to go back to the employer.
They will have to give the earnings details to the pension company.
Employer needs to sort this.
 
I rang pension company today and they said they'll get in touch with company to confirm relevant info. I emailed payroll also to let them know. Hopefully it'll be sorted soon thanks a million again for help, much appreciated.
 
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