The following redundancy and retirement payments, although not completely tax exempt; do qualify for some relief.
• Wages / Salary in lieu of notice on retirement or redundancy.
• Payment paid by your employer which is additional to the statutory redundancy payment. This additional payment is known as an ex-gratia payment or golden handshake and is up to certain statutory limits.
If your employer provides all or part of the lump sum in another form e.g. car, holiday, etc. the cash value of this item is taxable.
If this lump sum is on the termination of a contract this payment is chargeable to tax in the normal way.
If an employer pays for the cost of retraining an employee as part of a redundancy package, up to €5000 of the retraining cost is exempt from tax. The following conditions apply:
• The employee has more than 2 years continuous full time service
• The retraining is completed within 6 months of the redundancy
• The retraining is designed to improve skills/knowledge to assist in obtaining employment or setting up a business
• The employee cannot take cash instead and must avail of the retraining.
The tax exemption will not apply to dependents, spouse or civil partner of the employer.