Redundancy, how much would you walk away with??

naughtysmurf

If we could get a ball park figure, I'd appreciate it.

Wife may be made redundant shortly, with the company 17 years, she has the max amount of tax credits allocated to her (if that matters)

Never received redundancy before.

So company is paying 6 weeks per year capped at 13 years plus she will also get the statutory 2 weeks per year, we assume for the full 17 years

Annual salary for the last number of years is 72k

Would there be tax to be paid?

How much would she expect to walk away with approx

Thanks

Blingy

naughtysmurf wrote: »

If we could get a ball park figure, I'd appreciate it.

Wife may be made redundant shortly, with the company 17 years, she has the max amount of tax credits allocated to her (if that matters)

Never received redundancy before.

So company is paying 6 weeks per year capped at 13 years plus she will also get the statutory 2 weeks per year, we assume for the full 17 years

Annual salary for the last number of years is 72k

Would there be tax to be paid?

How much would she expect to walk away with approx

Thanks

I think ( could be wrong) the state redundancy is 2 weeks per year capped at 600 per week. Also this could be included in the 6 weeks offered I know some companies where this was the case. Just something to check out. Sorry I can't help any further.

naughtysmurf

It's 6 weeks from the company + 2 weeks statutory

kenco

naughtysmurf wrote: »

It's 6 weeks from the company + 2 weeks statutory

I think up to 104 weeks or 2yrs settlement is non tax (might be wrong and there are some tricks to min the liability)

8 weeks for 13 years is a great deal in fairness to the employer (6 would be considered good). So that on its own is 104 wks and min if not tax free. The remaining 4hrs is 8wks so not much tax to be paid there.

Looks like the employer is trying to make the deal as attractive as possible but either way get an accountant to do the tax return so that all the bits and peices are covered out.

Best wishes hope it all works out

Stheno

Id talk to a tax specialist if I were you

naughtysmurf

kenco wrote: »

I think up to 104 weeks or 2yrs settlement is non tax (might be wrong and there are some tricks to min the liability)

8 weeks for 13 years is a great deal in fairness to the employer (6 would be considered good). So that on its own is 104 wks and min if not tax free. The remaining 4hrs is 8wks so not much tax to be paid there.

Looks like the employer is trying to make the deal as attractive as possible but either way get an accountant to do the tax return so that all the bits and peices are covered out.

Best wishes hope it all works out

Thanks, so any idea of a ball park figure?

kenco

naughtysmurf wrote: »

Thanks, so any idea of a ball park figure?

2 times annual Base salary would be there or thereabouts but again I would get this verified before making any major decisions here. An accountant with tax knowledge won't cost much and will pay for themselves come tax return time.

nompere

naughtysmurf wrote: »

Thanks, so any idea of a ball park figure?

Redundancy payments are generally exempt up to the maximum of either the Standard Capital Superannuation Benefit or the basic exemption plus the additional exemption.

The SCSB is calculated by taking the average remuneration of the last three years of service and multiplying that figure by the total of years of service and then dividing by 15.

If someone works for 20 years, and their average pay for the last three years is €50,000 then that calculation works out at €66,666.

The basic exemption is €10,160 plus €765 per year of service. The additional exemption is further €10,000, unless the person has had a lump sum in the previous 10 years.

So for 20 years of service it is €10,000 plus 20 times €765 plus €10,000. That's €35,300.

Generally the SCSB produces higher figures for well paid employees, and the exemption method works for employees closer to minimum wage.

naughtysmurf

nompere wrote: »

Redundancy payments are generally exempt up to the maximum of either the Standard Capital Superannuation Benefit or the basic exemption plus the additional exemption.

The SCSB is calculated by taking the average remuneration of the last three years of service and multiplying that figure by the total of years of service and then dividing by 15.

If someone works for 20 years, and their average pay for the last three years is €50,000 then that calculation works out at €66,666.

The basic exemption is €10,160 plus €765 per year of service. The additional exemption is further €10,000, unless the person has had a lump sum in the previous 10 years.

So for 20 years of service it is €10,000 plus 20 times €765 plus €10,000. That's €35,300.

Generally the SCSB produces higher figures for well paid employees, and the exemption method works for employees closer to minimum wage.

No good at sums her details are in my first post, what would it work out at for her, we will get independent professional advice, was just to give us an idea anyway

JIdontknow

Im not an accountant or tax specialist, and until recently had no clue of tax, this is just an approx breakdown but dont quote me!

Statutory is capped at €600 per year.
so thats 17 x 2 x €600 = 20,400
A bonus week is also added, so that brings it to 20,400 + 600 = €21,000

A tax free allowance of 10,165 is available afaik.

Another tax free allowance of 10,000 is available if no redundancy was received in the last 10 years I believe,

Also as stated 765 per year is tax free additionally, so 765 x 17 = 13,005
13,005 + 10165 + 10,000 = 33,170 tax free

The 6 weeks per year gross will be:
6 x 17 x (72000/52)
= 141,230

This is where the tax calcs get me (not sure if top slicing is still available etc) but a rough calc would suggest that (141,230 - 33170)*0.41 = 44,305 tax paid, so you would get 141,230 + 33,170 - 44305 = approx 130k after tax. As I said these figures may not be accurate at all, someone can perhaps do a more accurate calculation.

More info here: http://www.revenue.ie/en/tax/it/leaflets/it21.html#section7

Nody

naughtysmurf wrote: »

No good at sums her details are in my first post, what would it work out at for her, we will get independent professional advice, was just to give us an idea anyway

81,600 with SCSB and 33,005 with exemption. Anything beyond that is likely to be taxed. Assuming 113 weeks pay (13 * 8 week, 4 * 2 weeks + 1 week) at 1384.615 EUR / week (72,000/52) you're looking at 156,461.50 EUR pre tax. Remove 81,600 as tax free and you got 74,861.54 EUR to be taxed as income this year at the higher tax bracket at 41% leaving around 44,168.31 EUR or total of 125,768.30 EUR.

I'm sure I may have missed a few taxes etc. as I took the first tax calculator I got for it but you wanted a ball park figure

naughtysmurf

JIdontknow wrote: »

The 6 weeks per year gross will be:
6 x 17 x (72000/52)
= 141,230

Thanks, so this bit should read (I think) because company have capped it at 13yrs

6 x 13 x(72000/52)
=108,00

Nody

naughtysmurf wrote: »

Thanks, so this bit should read (I think) because company have capped it at 13yrs

6 x 13 x(72000/52)
=108,00

Updated to my previous calculation would put that at 121,683.7 EUR and 101,827.40 EUR from J1dontknow's calculation (149,538.40 base; 116,368.4 taxable * 0.59 + 33170); once again a ballpark calculation only and professional advice is strongly recommended and as you noted will be taken.

naughtysmurf

Thanks guys, will take a bit of pressure off for sure

JIdontknow

Apologies I thought you meant capped as the overall payment capped at 13 years salary (I was going to ask it must be some company!! often redundancy payouts are capped at 2 or 3 years salary).
back to the calculation, I am not familiar but I presume even though the payment is capped at 13 weeks, your 17 years tax free allowances and credits still stand, in which case,

Statutory = 600 * 17 * 2 + (1 bonus week;600) = 21,000

Gross Lump sum: =13 * 6 * (72000/52) = 108,000

Tax free allowances: 10,000 + 10160 + (17 * 765) = 33165

Tax Paid on Gross Lump Sum approx = (108,000 - 33165)* 0.41 = 30,682.35

Net Lump Sum = 108,000 - 30682.35 = 77,317.65
Total = 77,317.35 + Statutory (21,000) = 98,317
so approx €100,000

Its also worth noting, I believe you can fill in a tax return form next year and claim some of this tax paid - not sure how much you can get back but maybe some of it.

Lux23

Even if you are taxed though, if she decided to take some time out wouldn't she get some of the tax back?