Redundancy questions

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XLR8

Guest
Hi
I'm being made redundant at the end of the year. It suits both me and the company to be honest so that's OK. I'm getting a decent payment and am familiar with the tax guidlines on this as regards SCSB etc. My last day of work is Dec 31st.

I have 3 questions
1) Is it better for me to receive the payment as a payment for part of teh 2007 tax year or as a payment in the 2008 tax year ( taking into account tax credits for 2008 and that I am already in the higher tax band for 2007 etc)?

2) I believe I should sign on straight away to maintain continuity in my stamps. I assume I will be entitled to PRSI payments (or is this dole?)? If this is correct is there a limit on how long these payments are made for and would anyobne have a rough indication of how much you get weekly?

3) Am I entitled to a tax refund for 2007 by being made redundant (keeping in mind the answer to question 1) - if so how much roughly would this be? (i.e. would this be total tax for the year, a % of the year etc...)

Thanks in advance
 
i may also be getting made Redundant v soon - i'm just wondering if i will be entitled to get a contribution towards my mortgage and if so, do i need to be out of work for X amount of time?
 
XLR8 said:
Hi
I'm being made redundant at the end of the year. It suits both me and the company to be honest so that's OK. I'm getting a decent payment and am familiar with the tax guidlines on this as regards SCSB etc. My last day of work is Dec 31st.

I have 3 questions
1) Is it better for me to receive the payment as a payment for part of teh 2007 tax year or as a payment in the 2008 tax year ( taking into account tax credits for 2008 and that I am already in the higher tax band for 2007 etc)?

2) I believe I should sign on straight away to maintain continuity in my stamps. I assume I will be entitled to PRSI payments (or is this dole?)? If this is correct is there a limit on how long these payments are made for and would anyobne have a rough indication of how much you get weekly?

3) Am I entitled to a tax refund for 2007 by being made redundant (keeping in mind the answer to question 1) - if so how much roughly would this be? (i.e. would this be total tax for the year, a % of the year etc...)

Thanks in advance
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As you will be finishing up at the end of the year you will be using up all of your tax credits and standard rate cut off point for the year.

However if, as part of the redundancy payment, you have a taxable ex-gratia sum, you will probably be entitled to a tax refund using "top slicing relief". Basically, this relief works to refund the difference between the amount of tax you pay on the taxable ex-gratia sum (which will probably be 41%) and the average rate of tax you've paid over the previous three years (which, for most people would be nearer 30%).

If you are made redundant in 2008, rather than 2007, there would probably be a small tax saving (as you would be getting some 2008 tax credits/allowances) but if you take up a new employment in 2008 this will balance out anyway.
 
It depends on when you get employment in 2008. Depending on your redundancy payment, you may be better off not working for a few months in 2008 and getting a tax rebate later in that year.
 
Nige said:
However if, as part of the redundancy payment, you have a taxable ex-gratia sum, you will probably be entitled to a tax refund using "top slicing relief". Basically, this relief works to refund the difference between the amount of tax you pay on the taxable ex-gratia sum (which will probably be 41%) and the average rate of tax you've paid over the previous three years (which, for most people would be nearer 30%)
Click to expand...


How do you calculate your avr rate of tax? Is it your tax paid divided by your gross income?
Also how do you reclaim it?

I read on the Revenue site that there is no PRSI on the taxable portion of the lump sum but there are Health Contributions.

Would this be done by the empoloyer when paying or do you need to recalim the PRSI?
 
Your employers should apply the correct prsi to your taxable lump sum.

To get your average tax rate for the previous years, just divide the income tax paid by the taxable income. To claim top slicing relief, just send your P45, with details of your redundancy payment and your last few P60s to your tax office.
 
XLR8, to answer your question regarding signing on -
You should make a claim as soon as you become unemployed (if you finish on 31/12, then call to your local Social Welfare Office on 2/1 when they re-open). There is usually a period of disallowance if redundancy payments have been made, but you'll get all the information you need when you make your claim.

Assuming you've got sufficient PRSI contributions, you will be eligible for Jobseeker's Benefit which is paid for 12 months. The rate for a single person for 2007 is €185.80, with increases for dependant adults and children. This rate of payment generally increases in January following the budget.

susie1, do you mean Mortgage Interest Supplement from the Community Welfare Officer (CWO)? You can make an application once you are unemployed, entitlement will depend on your circumstances (e.g. total household income, savings, amount of redundancy, etc).

You can get an application form from the CWO at the local Health Centre.
 
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