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Received Lump sum. Go straight back to work?

  • 30-11-2017 11:31am
    #1
    RebelButtMunch
    Registered Users, Registered Users 2 Posts: 2,386 ✭✭✭


    Hi

    If I receive a severance package in January, is there a specific period of time I should wait before returning to a job to minimize any tax implications. ? I'm on a three months notice period if that makes any difference, and that notice period would be paid and I'd be let go straight away.

    I'm asking because a friend of a friend story that went along the lines of 'my mate was in the same boat and he was told not to work for three months' .


Comments

  • #2
    CIARAN_BOYLE
    Registered Users, Registered Users 2 Posts: 14,599 ✭✭✭✭CIARAN_BOYLE


    RebelButtMunch wrote: »
    Hi

    If I receive a severance package in January, is there a specific period of time I should wait before returning to a job to minimize any tax implications. ? I'm on a three months notice period if that makes any difference, and that notice period would be paid and I'd be let go straight away.

    I'm asking because a friend of a friend story that went along the lines of 'my mate was in the same boat and he was told not to work for three months' .

    Well the friend of a friend could have been put on gardening leave when he finished.

    That's said if that taxable portion of your lump sum is large you will have used up your tax credits and cut off point for the year already and will be taxed 50% on everything you earn. Bear in mind your severance package could be entirely tax free in which case no tax implications arise.


  • #3
    srsly78
    Registered Users, Registered Users 2 Posts: 7,157 ✭✭✭srsly78


    Some pensions are tax-free but still reduce tax credits, go figure.

    OP your tax is determined by your total earnings for the year. Doesn't matter when you start work. If you want to pay less tax just earn less.


  • #4
    exaisle
    Registered Users, Registered Users 2 Posts: 2,675 ✭✭✭exaisle


    srsly78 wrote: »
    OP your tax is determined by your total earnings for the year. Doesn't matter when you start work. If you want to pay less tax just earn less.

    If OP starts work before the year end, it's possible that he'll pay 52% on his earnings with no tax credits (as they've all been used up on the redundancy). If he starts in January (or, if he starts in December but doesn't get paid until January) then he starts off with a full year's tax credits and bands....


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