124 Tax treatment of certain severance payments

Summary

This section imposes a charge to tax under Schedule E on certain termination allowances and severance allowances paid to outgoing members of the Oireachtas and to former holders of ministerial and parliamentary offices.

Details

(1) The section applies to —

• a termination allowance, other than such part of a termination allowance consisting of a lump sum, payable under section 5 of the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992, and
• a severance allowance or a special allowance payable under Part V of the Ministerial and Parliamentary Offices Act, 1938.

These allowances are treated as profits or gains arising from an office or employment and, accordingly, are chargeable to tax under Schedule E. The tax chargeable is computed in accordance with the Schedule E basis of assessment (see section 112(1)), and the allowances are treated as emoluments to which PAYE applies (see Chapter 4 of Part 42).

Relevant Date: Finance Act 2021