I propose to take Questions Nos. 496 and 498 together.
It is not possible to say how many in the categories set out in the table beneath will retire in the next twelve months and consequently it is not possible to provide a meaningful estimate; however, the table gives an indication of the potential revenue on the basis of actual payments in the period June 2010 to June 2011.
|
Lump Sums between €75,000 and €200,000 relevant amounts @ 20%
|
Lump sums over €200,000 relevant amounts @ 41%
|
|
€
|
€
|
Civil Servants
|
120
|
Nil
|
Civilian Employees
|
Nil
|
Nil
|
Military Personnel
|
591,000
|
50,000
|
|
Total: €641,120
|
The taxation of retirement lumps sums is based on the legislative arrangements in force when the lump sum is paid. The following arrangements currently apply:
Lump sum amounts up to €200,000 are paid free of tax. They are also paid free of the Universal Social Charge (USC).
The portion of a lump sum between €200,001 and €575,000 is taxed on a ring-fenced basis at 20%. (This means that no tax credits or other tax reliefs can be set against this portion of the lump sum.) No USC is chargeable.
Any amount of a lump sum in excess of €575,000 is taxed at the individual's marginal rate of tax (credits and other reliefs are available). In this instance, USC is chargeable on the excess.
The threshold figures detailed above are lifetime limits with lump sums paid on or after 7 December 2005 aggregating with any later lump sums in counting towards those thresholds. As with all taxation measures, these arrangements are subject to any review that might occur as part of the annual Budget and Finance Bill process and that is a matter for my colleague, the Minister for Finance.