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Tax on "loss of office" payment?

  • 16-12-2011 3:32pm
    #1
    paulpd
    Registered Users, Registered Users 2 Posts: 159 ✭✭


    Hello,

    A friend has been told by their employer that their position within the company is now redundant. They are an employee with many years service. They have two choices ; take redundancy, or move to another position within the company with different conditions and a reduction in salary.

    They have been advised that they will receive E2,500 in "loss of office" compensation if they move to the other position in the company.

    Is this sum taxable? They are of the belief that up to E10,000 can be received tax free.

    Thanks for any help.


Comments

  • #2
    nompere
    Registered Users, Registered Users 2 Posts: 1,678 ✭✭✭nompere


    Their belief is probably mistaken. Compensation for business reorganisation is taxable under general principles -- and a measure of relief is available under Section 480 TCA 1997.

    Whether there is any relief under that provision depends on a number of factors, mainly their income for the entire year in which the payment is made.

    There are much more generous reliefs when an employment ceases -- but that isn't the case if you stay with the company on different terms.


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