1. Termination Payments

2. Taxation of Termination Payments
A termination payment is a payment made to an employee after the termination of their employment.
Termination payments that an employee is entitled to under their contract of service is taxable under Schedule E.
Termination payments not received as part of the employee’s contractual rights benefit from some exemptions.
Under S123, a termination payment is treated as taxable in the year in which the employment was terminated.

3. Exempt payments
Payments on termination of employment due to death and payments made on account of injury or disability
Statutory redundancy payments. Amounts in excess of statutory payment is treated as a termination payment, which may be taxable.
Lump sums on retirement under Revenue approved pension schemes
Up to €5,000 in re-training costs

4. Elements of Termination Payments
Cash payment (ex-gratia)
Payments in lieu of notice
Retraining costs
Assets

5. Relief on Termination Payments
Three calculations:
Standard Deduction
Increased Standard Deduction
Standard Capital Superannuation Benefit (SCSB)

6. Standard Deduction €10,160 plus €765 for each complete year of service
No restrictions on application of this deduction

7. Increased Standard Deduction
€10,160 plus €765 for each complete year of service (Standard Deduction)
Plus €10,000 less any lump sump received or receivable from a superannuation scheme.
Taxpayer can not claim the Increased Standard Deduction if they have made a claim for tax relief on a termination payment in the last ten years
Formal Revenue approval is required before the increased standard deduction can be applied

8. Standard Capital Superannuation Benefit (SCSB)
Formula
((Last 3 years remuneration/3)x(Number of complete years of service/15))Less current value of tax-free lump sum
Last three years is from date of termination to 36 months previously
Remuneration includes all Schedule E income including BIK