What are the tax free exemptions for redundancy.

[Martinslan]

Well it looks like the big "R" will come on the table in the next month.
To do some rough figures, I would like your help. I would like to know what the Tax Free Exemptions are for Redundancy as a PAYE employee.
I have looked up Revenue.ie and it says $10,160 plus €765 per year of service. In my case that would amount to €26,226. Is this correct ?? Does the lump sum then get txed at 41% after that ? It also states on Revenue site that Stat Redundancy part of the lump sum is exempt (tax free) ? Does that mean I can add 2 weeks per year of service by the numbers of years(21) by weekly gross pay. ?? This would make a signigicant difference.
At the end of the day it is all about the take home lump sum to bridge the gap in earnings between the end of this job and ......who knows.

I did try the "search" but did not get anything specific.
Thanks in advance
Martin
Slán

 

[ClubMan]

Presumably you saw this on the Revenue site already?

[broken link removed]

Is "top slicing" perhaps a relevant term here?

Also - if you are unemployed then sign on. And if you are unemployed for a while claim tax back using a [broken link removed].

 

[murp]

Martin

What you have gotten details on are what are referred to as termination payments, these are typically payments made to employees when leaving service as a means of a thank you.

This is not the same as a redundancy payment.

If you visit www.entemp.ie you you should be able to find details of what your statotroy redundancy entitlement are - statutory redundancy is paid tax free, but can impact on how long before you can claim any State social welfare benefits.

if your employer chose to give you a sum in excess of the statutory reduncy you are entitled to then you would be looking at the termination payment calculations to see how much of that payment could be received tax free.

There are 3 formulas to apply to see what gets you the most tax free from a termination payment, the excess is then liable to income tax in the normal way. Any lump sum paid or payable from a company pension scheme can have an impact of what can be paid tax free.

However there is a relief called top slicing relief that can potentially reduce the tax liability on the excess.

Is the company appointing someone to speak to staff that are being made redundant to give them some financial advice?

 

[Martinslan]

Thanks very much to both of you. The info from the link to the Dept of Ent &T. was very useful. Spend a good bit if time working on the numbers this morning. Top Slicing I knew nothing about. As I close out the week I know that unless there is a major change of heart at the 13th hour then it will happen next month.
Slán