Tax on Redundancy

[nip102]

Hi

Could someone advise what tax is applicable to the taxable portion of a redundancy settlement?

Income tax @ 41% ? (I assume)
PRSI ?
Income Levy ?
Health Levy ?

Thanks for any clarifications.

Thanks
N

 

[umpsty]

Just a suggestion but there is a book called TAB in most good book shops or reasons which covers this and most financial issues.

 

[Nige]

Income tax, health levies and income levies apply to the taxable element of a termination payment. PRSI does not apply.

 

[sunnygirl]

If you normally pay tax at the marginal amount of 20%, is that the rate of tax you will pay on redundancy payment?

 

[Nige]

Probably not. The taxable element is processed as pay for that period through your payroll and so if it puts you over your standard rate cut off point for that pay period, then the 41% rate will apply.

However, if this happens, you will be entitled to some tax back. You can submit p50s every month (once you are unemployed for a month) and if some of it still remains taxed at the higher rate you should apply for top slicing relief after the year end.