Twenty years' service, for example, gives a basic exemption of €25,460. Your employer applies the exemption through payroll, but check the sum on your payslip.
Quick facts
- Statutory redundancy
- Tax and USC free
- Basic exemption
- €10,160 + €765 per year
- Increased exemption
- +€10,000, once in 10 years
- SCSB
- 1/15 of average pay × years
- Lifetime cap
- €200,000
- Retraining
- Up to €5,000 tax-free
Statutory redundancy
The redundancy you're legally owed under the Redundancy Payments Acts is free of tax. "This payment is exempt from Income Tax and Universal Social Charge (USC)." See our statutory redundancy guide for how it's worked out.
The basic exemption
"The basic exemption is €10,160, plus €765 for each full year you were working for your employer." Revenue's example: "John's basic exemption is calculated as €10,160 + (€765 x 20) = €25,460".
Part-time and job-share years count; career breaks don't. You can use it with different employers, as long as you stay under "a life-time limit of €200,000."
The extra €10,000
"You may be entitled to an increase of €10,000 on the basic exemption if:" you haven't had a tax-free lump sum above the basic exemption in the last 10 years, and you're not in a work pension scheme, or you give up its tax-free lump sum. Any pension lump sum you're due is taken off the €10,000.
"The increased exemption may only be granted once in a ten-year period."
SCSB, for long and well-paid service
"SCSB is calculated at one fifteenth of your average annual pay for your last 36 months in employment." That's multiplied by your full years of service, minus any pension lump sum. You get whichever exemption is higher.
What's always taxed
"A lump sum paid under the terms of a contract of employment is taxable in full." So is pay in lieu of notice if your contract provides for it.
Retraining your employer pays for as part of the package is tax-free if you have over 2 years' service and "the retraining is completed within six months of the redundancy and the cost does not exceed €5,000."
Common questions
Is statutory redundancy taxable in Ireland?
No. Statutory redundancy is exempt from income tax and USC.
How much of an ex gratia redundancy payment is tax-free?
The basic exemption is €10,160 plus €765 for each full year of service. An increased exemption of up to €10,000 or SCSB may give more.
What is the lifetime limit on tax-free termination payments?
€200,000 across all employers.
How often can I get the increased exemption?
Only once in a ten-year period.
Is pay in lieu of notice tax-free?
Not if your contract provides for it: then it's taxed as pay.