In the backdrop of the Global and Local economic downturn, many companies in Ireland are looking to implement cost cutting exercises to ensure their own survival. The result of these cost cutting exercises has led to an ever increasing number of people being made redundant with many more facing the threat of redundancy.
Given this fact, it is vital that you understand the issues that surround a redundancy from a personal point of view and how you can look to protect yourself in this environment.
What is Statutory Redundancy?
Where and employee has over two years service with an employer, they are entitled to statutory redundancy. The statutory redundancy payment is not subject to tax.
What is the tax payable on redundancy payments?
As mentioned, the statutory redundancy payment can be received tax free. However, any ex gratia payments above the statutory entitlement will be liable to tax. There are attractive reliefs available on these payments and the calculation of these reliefs require specialised knowledge and calculation.
What is Top Slice Relief?
Top Slice relief is a further relief that is available to you in the year of redundancy. Top Slicing relief relates to the tax payable and ensures that your lump sum is not taxed at a rate higher than your average rate of tax for the 3 years prior to redundancy or retirement. This is a generous relief that is often overlooked by individuals. It is therefore vital that you assess whether you are entitled to claim Top Slice relief.
How can I protect myself?
There are ways to protect yourself in the event of involuntary redundancy. This can be done through products available that provide a replacement income for a set period of time following redundancy. There may be restrictions on these products so it is vital that you talk to us today to discuss your own personal situation.
If you are currently going through a redundancy or are worried about redundancy please call us today and arrange a meeting.
