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Question on redundancy workings ?

  • 19-01-2011 2:44pm
    #1
    Humblepie
    Registered Users, Registered Users 2 Posts: 94 ✭✭


    Folks,
    Re voluntary or involuntary redundancy (excl statutory, which I know is tax free) - say voluntary is 4 weeks for every yr and involuntary entitlement is 6 weeks for every year of service.
    My question is - after the tax free sum is calculated, how do I know what rate the balance (taxable) is taxed at ?? Is it at 20% or 41% ? :confused:

    Thx


Comments

  • #2
    katseye
    Registered Users, Registered Users 2 Posts: 17 ✭katseye


    Typically you will pay at the top rate of 41% however it does depend on your earnings to date in the given tax year. If you have been on a reasonable salary and have a few years of service it will be probably be taxed at 41% but then there is a clawback facility after the revenue calculates your average tax rate over the past three years. This is know as top-slicing relief i.e. 41% - x% average tax rate. You apply for this tax refund at the end of the tax year.

    There are additional options that can be taken when applying for redundancy that can help reduce the taxable part but these come with terms and conditions. These should be explained to you by a taxation/revenue specialist.

    There is lots of general info about this on citizensinformation.ie and revenue.ie. The info provided on boards won't be of much use without knowing your more intimate tax and earnings details! (Which I might add, we don't really want to know!)


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