Budget 2013 axes Top Slice Relief on Ex-Gratia Payments
Employers need to be aware that from 1st January 2013 ex-gratia lump sum payments of €200,000 or more on termination or severance will no longer be eligible for Top Slicing Relief.
To date, individuals who were eligible for large ex-gratia payments paid tax in the year that they received the payment at their marginal rate. In the year that followed, they could apply to Revenue to have their payment reassessed based on their average tax rate in the previous three years. Bearing in mind tax credits, lower rate tax bands etc. this generally reduced their average rate from 41% to approx. 30% resulting in a tax refund.
Budget 2013 has abolished Top Slice Relief from 1st January 2013 for non-statutory payments of €200,000 or more.