Termination payments

How termination payments work in Sage 50 Payroll Ireland, including exemptions and how to handle them in payroll.

You can make a termination payment when someone leaves, often due to redundancy or retirement. Some payments qualify for tax relief or can be tax-free.

Key points about termination payments

• Basic Exemption: Part of the payment can be tax-free. The exempt amount depends on how many years the employee has worked
• Increased Exemption: Employees can qualify for a higher exemption if they haven’t used certain tax reliefs before
• Standard Capital Superannuation Benefit (SCSB): This calculates the tax-free portion based on average annual pay and years of service
• Payment in Lieu of Notice: This amount is taxable as normal pay

 NOTE: Before you process the payment, contact revenue.ie to confirm if it's subject to tax, PRSI and USC. You can then set up a new payment.