Taxed a lot on redundancy

retro:electro

Not sure if this is the right place to be posting. My mother was made redundant at the age of 66. She received two intermittant cheques, the first tax free, the second one was not. They were both to the value of around 10,000. The second cheque got taxed for 3,000, is this right? I know a getting a lump sum like that means you are guaranteed to be taxed but this seems like a lot. Is there any way she could claim some of it back?

Phil_Lives

applying for a balancing statement in 2015 might return a lot of that deducted tax.

daveohdave

Capital Gains has risen at a ridiculous rate in the last few years:

http://www.revenue.ie/en/tax/cgt/

Alan Shore

daveohdave wrote: »

Capital Gains has risen at a ridiculous rate in the last few years:

http://www.revenue.ie/en/tax/cgt/

It has, Dave but what has that to do with this thread?

SCOOP 64

Samething happen to me was taxed alot on second payment, but received a tax refund at end of tax year, got most back.

retro:electro

SCOOP 64 wrote: »

Samething happen to me was taxed alot on second payment, but received a tax refund at end of tax year, got most back.

Did you have to apply for the tax refund or did it just come to you automatically at the end of the year?

Ed_Stephens

As far as I know the statutory part of the redundancy(2 wks per year) is tax free and the rest is taxed as usual. The citizen advice website is a good place to start or call into their offices. Tax is based on a years income so your tax credits are averaged out over 52 weeks so assuming she doesn't work for the rest of the year she will most likely be due money back at the end of the year.

Dick Turnip

Statutory part is tax free. Also first 10k (approx) is tax free assuming redundancy wasnt received in previous 10 years

SCOOP 64

anna080 wrote: »

Did you have to apply for the tax refund or did it just come to you automatically at the end of the year?

I did apply, this can be done on line when you sigh up on Revenue.ie.

wexfordman2

Dick Turnip wrote: »

Statutory part is tax free. Also first 10k (approx) is tax free assuming redundancy wasnt received in previous 10 years

I thought the non statutary was taxed differently also, for example there is a formula based on years service which can be used to reduce the taxable amount on lump sums?

13/15ths for example if you have 13 years service ?

daveohdave

Alan Shore wrote: »

It has, Dave but what has that to do with this thread?

I assumed it was taxed as capital gains, I would have thought that was obvious. If it isn't, would you not state that instead of mouthing off?

J.Ryan

daveohdave wrote: »

I assumed it was taxed as capital gains, I would have thought that was obvious. If it isn't, would you not state that instead of mouthing off?

Why would it be CGT?

amtc

No it's not taxed as CGT.

Before last you could claim Top Tax Slicing Relief but that was abolished. Personally I got 13k back from this in 2013. It is retrospective.

The best advice I can give is to see a tax accountant. PM me if you want mine

allthedoyles

As the person is over 66 , let the tax office know this and ask them to process whichever type of assessment in most beneficial .

Total earnings in 2014 will then dictate this .

myshirt

First 10k is grand, basic exemption.

It's the next 10k that refers to the having not received a termination payment in the last 10 years. Not the first 10k.

And top slicing relief is still there, just not for those lucky chaps that get 200k + in ex gratia payments.

OP - do a good bit of googling, there's good info out there. You don't necessarily need to see a tax consultant, but then again, you've given very limited information. It can be as simple as it can be complex, but I'd suspect it's very simple. An hour or so with a tax consultant might be good value if you are getting no where. Ultimately, as long as you don't sit on your thumbs, she'll get that tax back. It'll be grand.

Alan Shore

anna080 wrote: »

Not sure if this is the right place to be posting. My mother was made redundant at the age of 66. She received two intermittant cheques, the first tax free, the second one was not. They were both to the value of around 10,000. The second cheque got taxed for 3,000, is this right? I know a getting a lump sum like that means you are guaranteed to be taxed but this seems like a lot. Is there any way she could claim some of it back?

How long was she in this employment?

The statutory element is exempt. The balance could be exempt subject to the basic, increased basic or SCSB.

Why did she receive two seperate cheques?

Alan Shore

myshirt wrote: »

And top slicing relief is still there, just not for those lucky chaps that get 200k + in ex gratia payments.

Think TSR is gone for payments after 01.01.14.

http://www.revenue.ie/en/tax/it/leaflets/it21.html#section8

retro:electro

Alan Shore wrote: »

How long was she in this employment?

The statutory element is exempt. The balance could be exempt subject to the basic, increased basic or SCSB.

Why did she receive two seperate cheques?

She was employed with them for over twelve years. Don't know why she recieved the cheques this way that's just how it happened.

Alan Shore

So she should have received statutory redundancy of (12 x 2) + 1 = 25 weeks salary.

Then basic exemption of €10,160 + (765 x 12) tax free.

She should contact the payroll department to see what the story is.

myshirt

Alan Shore wrote: »

Think TSR is gone for payments after 01.01.14.

http://www.revenue.ie/en/tax/it/leaflets/it21.html#section8

Correct.

I'm still living in the past!

retro:electro

Thanks for all the help and advice. We have since learned that it was her pension she was taxed on not her redundancy. She got confused. She got a lump sum private pension that she was paying into at work and it was this this that was taxed which I believe is standard procedure. Thanks again.