Increased Exemption re Redundancy.

Zadkiel

Hi All,

I was wondering if someone with experience of a similar issue could enlighten me please?

I'm leaving my job on VR.

As I understand it my taxable amount will be calculated on the higher of Basic Exemption, Increased Exemption or Standard Capital Superannuation Benefit (SCSB).

If I take the basic exemption I can keep my tax free pension lump sum (Not a lot so not worth taking).

If I take the Increased exemption I must confirm that:
(a) that I have not, in the previous ten years, claimed relief in excess of the Basic Tax Exemption (I haven't)
(b) that while I am a member of the Pension Scheme, I have irrevocably given up the right to receive a lump sum from the Pension Scheme.


I currently would be due to pay anout 2k in tax if i didn't take the increased exemption but don't want to save 2k now for the sake of risking a lump sum in future.

If i claim the Increased exemption it's not clear if I waive my right to the Tax free lump sum from this current pension or from ANY Pension.
I've checked the Citizens Information and revenue sites and the wording is just as ambiguous.

Any points to clarify would be very welcome.
Thank you
Z

Zadkiel

Any ideas folks?

If not would any one have a personal tax adviser details they could PM that I could contact.

Again any help much appreciated.

Thank you
z

Calahonda52

Zadkiel wrote: »

Any ideas folks?

If not would any one have a personal tax adviser details they could PM that I could contact.

Again any help much appreciated.

Thank you
z

can you post the ambiguous links please?
Its a lot easier than have us all have to go look, as well as vouching that you have actually done the work
Have you asked the trustees of the pension scheme if they have anything on it?

Zadkiel

Calahonda52 wrote: »

can you post the ambiguous links please?
Its a lot easier than have us all have to go look, as well as vouching that you have actually done the work
Have you asked the trustees of the pension scheme if they have anything on it?

Hi Calahonda,

Thanks for replying.

Sure here is the one from the Citizens Information at this link:

http://www.citizensinformation.ie/en/employment/retirement/income_tax_in_retirement/retirement_lump_sum_taxation.html

Basic Exemption and Increased Exemption
The Basic Exemption is €10,160, plus €765 for each complete year of service. (This does not include statutory redundancy which is tax free.)

An Increased Exemption of an additional €10,000 on top of the Basic Exemption is available in certain circumstances. You can get the Increased Exemption if you haven't received a tax-free lump sum in the last 10 years and you are not getting a lump sum pension payment now or in the future.

And the ROS one:

https://www.revenue.ie/en/employing-people/what-constitutes-pay/what-pay-includes/lump-sum-payments.aspx

Increased exemption
Your employee may claim an increased exemption, up to €10,000, providing they have not received a lump sum payment in the previous ten years.

Your employee may be due to receive a lump sum payment from their pension scheme. You must deduct this lump sum from the €10,000.

If this payment is not due yet, then you deduct the current value of it.

Your employee may have agreed with their pension provider that they will never receive a lump sum payment. They must inform you of this agreement in order to receive the increased exemption.

If you are in an occupational pension scheme, the Increased Exemption is reduced by any tax-free lump sum from the pension scheme you may be entitled to receive.

Claiming the increased basic lump sum exemption
Note

The information on this page refers to your current obligations. For your obligations before 1 January 2019, please see the Employers Guide to PAYE.

The increased exemption on lump sums is an additional €10,000. Your employee can receive this exemption if they:

are not a member of an occupational pension scheme
give up their right to receive a lump sum from the pension scheme
have not received an increased exemption in the previous ten years.
If they are in an occupational pension scheme this increased exemption (€10,000) is reduced by either:

any tax-free lump sum from the pension scheme they are immediately entitled to
the current actuarial value of any lump sum they may receive from a pension scheme in the future.
If the lump sum from the pension scheme is more than €10,000, they will not qualify for the increased exemption. If it is less than €10,000, they will qualify for the increased exemption minus the lump sum amount.

The increased exemption may only be granted once in a ten-year period.

You do not need Revenue approval before including this increase in basic exemption.

Unfortunately the pension trustees are singularly unhelpful.

I don't intend taking a lump sum from it (my retained pension is miniscule).
I'm just trying to figure out if the above affects any pension I may join in future.

Any helps really appreciated.

Thank you

SCKGroup

My understanding is that if you waive your right to a tax free lump sum from the occupational pension scheme linked with your current employer, this will not preclude you from receiving a tax free lump sum from other occupational or personal pension schemes which you go on to become a member of in the future. However, for peace of mind, no harm confirming this directly with the revenue before you make your decision.

namenotavailablE

I agree with what SCK posted- the 'act of waiving' refers specifically to the occupational scheme of the current employer according to my 2018 copy of the IPASS Payroll book (page 520 and again on pg 521).

Zadkiel

SCKGroup wrote: »

My understanding is that if you waive your right to a tax free lump sum from the occupational pension scheme linked with your current employer, this will not preclude you from receiving a tax free lump sum from other occupational or personal pension schemes which you go on to become a member of in the future. However, for peace of mind, no harm confirming this directly with the revenue before you make your decision.

namenotavailabl wrote: »

I agree with what SCK posted- the 'act of waiving' refers specifically to the occupational scheme of the current employer according to my 2018 copy of the IPASS Payroll book (page 520 and again on pg 521).

Thank you both so much for taking the time to reply!!