Lump sum payments

Standard Capital Superannuation Benefit (SCSB)

SCSB is an additional relief you may be entitled to. It typically benefits employees with high earnings and long service.

SCSB is calculated at one fifteenth of your average annual pay for your last 36 months in employment. This is then multiplied by the number of full years you were working for your employer. Any tax-free lump sum payments you have received, or are entitled to receive, from your work pension are subtracted from this benefit.

To arrive at your average annual pay figure, calculate your average annual pay over your last 36 months of continued service.

You may have taken unpaid leave within your previous 36 months. If so, you add your salary from prior weeks beyond your previous 36 months when calculating the average annual figure. This is permitted provided you did not receive any other taxable benefits during the period of unpaid leave.

Examples of unpaid statutory leave, where this approach may be available in calculating the SCSB, include:

  • unpaid parental leave
  • or
  • additional maternity leave.  
  • Example

    Eileen worked with Company X from 6 June 2007 until 8 June 2025 (18 full years). She received a termination lump sum of €60,000 (the first lump sum she has been paid). Eileen also received a lump sum of €11,000 from her work pension scheme. 

    Amount of Eileen's lump sum which is tax free
    Basic exemption CalculationValue

    Initial amount

     

    €10,160

    Add €765 for each complete year of service

    €765 x 18

    €13,770

    Basic exemption

     

    €23,930

    The increased exemption does not apply because the pension lump sum Eileen received is over the €10,000 limit.

     SCSB
     CalculationValue

    Calculate average annual pay for last three years

    		 €95,000/3

    €31,667

    Calculate 1/15 of the average annual pay

    		 €31,667/15

     €2,111

    Calculate amount due per years’ service

    €2,111 X 18

    €38,000

    Deduct the pension lump sum

    €38,000 - €11,000

    €27,000

    SCSB

    €0

    €27,000

    The SCSB is more beneficial to Eileen. She will be taxed on the balance of the termination payment that exceeds €27,000.

    The taxable amount of the lump sum she will receive is €33,000 (€60,000 - €27,000).

Note

Further details and examples can be found in Tax and Duty Manual  05-05-19.

Next: Compensation for a change in working practices

Published: 11 November 2025 Print this page

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