Taxes Consolidation Act 1997 section 124

Tax treatment of certain severance payments

Section 124 ensures that certain termination and severance allowances paid to members of the Oireachtas and holders of ministerial and parliamentary offices are treated as taxable employment income subject to PAYE.

• The section applies to termination allowances (excluding any lump sum element) paid to outgoing Oireachtas members, and to severance or special allowances paid to former holders of ministerial and parliamentary offices.
• These allowances are deemed to be profits or gains from an office or employment and are therefore chargeable to income tax under Schedule E.
• The tax charge is computed on the normal Schedule E basis of assessment, in the same way as ordinary employment income.
• The allowances are also treated as emoluments subject to PAYE, meaning tax must be deducted at source before payment is made.