Redundancy - Tax implications

Mink

We recently got informed at work that management are looking for redundancies.

The deal is the statutory package of 2 weeks pay per year of service. I've been told that this would be tax free.

If you break your service in the middle (of say 6 years to date) for 9 months, would your redundancy payment then be subject to tax? Someone said it would and that it would be around 40%!!

Nody

The statutory redundancy payment is a lump-sum payment based on the pay of the employee. All eligible employees are entitled to:

•Two weeks' pay for every year of service over the age of 16 and
•One further week's pay
The amount of statutory redundancy is subject to a maximum earnings limit of €600 per week (€31,200 per year).

Pay refers to your current normal weekly pay including average regular overtime and benefits-in-kind, but before tax and PRSI deductions, that is your gross pay.

The statutory redundancy payment is tax-free.

In short the answer is maybe depending on what you earn. More information here.

Mink

Nody wrote: »

The statutory redundancy payment is a lump-sum payment based on the pay of the employee. All eligible employees are entitled to:

•Two weeks' pay for every year of service over the age of 16 and
•One further week's pay
The amount of statutory redundancy is subject to a maximum earnings limit of €600 per week (€31,200 per year).

Pay refers to your current normal weekly pay including average regular overtime and benefits-in-kind, but before tax and PRSI deductions, that is your gross pay.

The statutory redundancy payment is tax-free.

In short the answer is maybe depending on what you earn. More information here.

Thanks a mil
I earn under 31k so it looks like I wouldn't be taxed right?

Nody

Mink wrote: »

Thanks a mil
I earn under 31k so it looks like I wouldn't be taxed right?

Correct.