Taxes Consolidation Act 1997 section 109

Payments in respect of redundancy

Section 109 deals with the tax treatment of redundancy lump sum payments made by employers, setting out how such payments are deductible and how any rebates from the Redundancy Fund are to be treated.

• Statutory redundancy lump sums paid by an employer are deductible in computing trading profits, but any rebate recoverable from the Redundancy Fund must be treated as a taxable receipt, so that the net cost to the employer is what is actually relieved.
• Similar deductions apply for investment-type companies claiming management expenses relief and for landlords whose property management expenses are deductible — in each case, relief is limited to the excess of the lump sum over any recoverable rebate.
• Where a redundancy payment relates to employment across multiple activities (for example, two separate trades), relief cannot be claimed more than once — the net amount must be apportioned between the different capacities in which the employee was employed.
• If the Minister for Enterprise, Trade and Employment pays a redundancy lump sum because the employer failed to do so, the employer gets no deduction unless and until the employer reimburses the Minister, at which point the payment is treated as having been made by the employer.