Entitled to PAYE tax refund after receiving redundancy lump sum?

Hockney

I took redundancy at the end of July, was entitled to a tax free section on the lump sum I received (under increased exemption rule), and did pay some tax on the amount which went over my tax free exemption at 41%.

I'm wondering if I can still claim tax on the PAYE I paid Jan-July. I've already paid my tax on the lump sum received, but will the remainder I got be added to my gross income for the year, or is it exempt?

I don't plan to work here for the rest of the year, heading off travelling in Oct. If I am due a refund I'm also in no rush to get it.

In this case what would be the easiest way to claim a refund, if I am entitled to anything?

Maybe submitting a P21 balancing statement in 2011?

Thanks for reading.

Alan Shore

Hi,
You will get a refund on a balancing statement. But you may also be entitled to Top Slicing Relief. http://www.citizensinformation.ie/categories/employment/retirement/income-tax-in-retirement/retirement_lump_sum_taxation
TSR will apply if the rate of tax suffered on your taxable lump sum exceeds the average rate of the tax in the previous 3 years.

betonit

Alan Shore wrote: »

Hi,
You will get a refund on a balancing statement. But you may also be entitled to Top Slicing Relief. http://www.citizensinformation.ie/categories/employment/retirement/income-tax-in-retirement/retirement_lump_sum_taxation
TSR will apply if the rate of tax suffered on your taxable lump sum exceeds the average rate of the tax in the previous 3 years.

I understand top slicing and tax paye tax back for not using all your credits in a year if you are made redundant during the year.. but if you get tax back for credits or band not used how does it impact on your top slicing rebate.
tx

Hockney

Thanks for that Alan.

I doubt I'm entitled to TSR as my salary never changed in the last 3 years, but I guess that will be checked by Revenue with the balancing statement too.

Cheers.

horse7

if i could jump in on this old thread,re redundancy lump sum.i came across this on the citizens advise site, Since 1 January 2011 there is an overall limit of €200,000 on the amount of the tax-free lump sum. Lump sum payments above that limit will be taxed as follows: Taxation rates for lump sum Amount of lump sum Income tax rate Up to €200,000 0% €200,001 - €575,000 20% Over €575,000 Taxpayer's marginal rate The amount of your lump sum that is subject to tax is not subject to social insurance (PRSI), but the Universal Social Charge may be payable. does this mean if one receives a total of 180,000euros when exiting their job,that there would be no tax on their total,except there may be usc payable? does that mean if someone gets 200,001euros as a lump sum to leave work,they have to pay taxes on 1euro. any ideas.

pigeonbutler

horse7 wrote: »

if i could jump in on this old thread,re redundancy lump sum.i came across this on the citizens advise site, Since 1 January 2011 there is an overall limit of €200,000 on the amount of the tax-free lump sum. Lump sum payments above that limit will be taxed as follows: Taxation rates for lump sum Amount of lump sum Income tax rate Up to €200,000 0% €200,001 - €575,000 20% Over €575,000 Taxpayer's marginal rate The amount of your lump sum that is subject to tax is not subject to social insurance (PRSI), but the Universal Social Charge may be payable. does this mean if one receives a total of 180,000euros when exiting their job,that there would be no tax on their total,except there may be usc payable? does that mean if someone gets 200,001euros as a lump sum to leave work,they have to pay taxes on 1euro. any ideas.

This is more related to the tax free lump sum that tends to be taken from pension fund on retirement (1.5 times final salary). If for example one's final salary was EUR 400,000, the max tax free lump sum used to be EUR 600k before these rules were introduced but will now obviously be subject to tax as you've outlined above.

There's different rules for severance pay (known as termination payments) which is what I think the OP was concerned with.

horse7

so severance pay is not a redundancy payment, and the 200,000euro in the citizens advise statement is the max gratuity one can receive. it seems quite a lot as my gratuity would be around 50,000euros.

pigeonbutler

horse7 wrote: »

so severance pay is not a redundancy payment, and the 200,000euro in the citizens advise statement is the max gratuity one can receive. it seems quite a lot as my gratuity would be around 50,000euros.

Apologies for any confusion. Severance pay and redundancy payments are the same thing. The 200k limit refers to a taxable lump sum which may be taken from pension schemes on retirement which is a very different issue.

The rules for tax free redundancy payments can be a little bit complex but are set out here: http://www.revenue.ie/en/tax/it/reliefs/lump-sum-payments.html

horse7

re; citizens advise site, Since 1 January 2011 there is an overall limit of €200,000 on the amount of the tax-free lump. so this should read .
The 200k limit refers to a taxable lump sum which may be taken from pension schemes on retirement, thanks for the info.