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Lump sum payments

  1. Overview
  2. Basic exemption
  3. Increased exemption
  4. Standard Capital Superannuation Benefit (SCSB)
  5. Compensation for a change in working practices
  6. Other tax-exempt termination payments

Basic exemption

The basic exemption is €10,160, plus €765 for each full year you were working for your employer. A termination payment from your employer will be tax free if it does not exceed the basic exemption.

You can count the following towards a full year's work:

  • time worked before and after a career break
  • a period of job-sharing or part-time work
  • and
  • for group companies, all work carried out in Ireland.

You cannot count a career break towards a full year’s work.

There is no limit on the number of times you can avail of the basic exemption provided that:

  • you receive the lump sum termination payments from different, unconnected employers
  • and
  • you do not exceed a life-time limit of €200,000.
  • Example

    John started work on 1 May 2000. He took a career break from 1 March 2010 to 1 July 2013. He is made redundant on 30 September 2023.

    His period of service with the company is calculated as follows:

    1 May 2000 - 1 March 2010 = 9 years 10 months

    1 March 2010 - 1 July 2013 (Career break)

    1 July 2013 - 30 September 2023 = 10 years 3 months

    His complete number of years of service is 20 years.

    John’s basic exemption is calculated as €10,160 + (€765 x 20) = €25,460

    John will not have to pay tax on any termination payment he may receive from his employer once it does not exceed €25,460.

Next: Increased exemption

Published: 26 June 2024 Print this page

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