EX Gratia or Voucher

I understand the tax rules around the voucher and what they can be used for.

this doesn't contravene them. nobody has received a voucher. they would normally be given at the end of the year anyway.

the company proposed as part of the wrap up to give staff their bonus vouchers as usual.

people reading into things rather than actually just answering the question🤷‍♂️

my question is simple

why is a tax advisor telling a company that it is more tax efficient for the employee to receive an ex gratia payment instead of a tax free voucher?

they have further said that staff are getting bad tax advice if they prefer to take a voucher instead of them putting in in ex gratia payment

I cannot understand their reasoning

ok put it like this

if someone has previously received ex gratia amounts of over €200k

Paying this as and ex gratia payment is actually taxable

similar someone could receive ex gratia amounts in the future that would make them hit the €200k limit and they would be charged tax on an extra thousand

Now tell me why ex gratia is better than voucher

what’s the reason because I must have missed it?

are you a tax expert or an accountant?

I'm an accountant also and this is really more me being curious about the logic behind the advice. I didn't previously share this so maybe if I do, it will make a bit more sense. Company prepared calculations with statutory amounts, ex gratia amounts and a voucher amount. A tax advisor has been appointed for a number of reasons (I don't want to give too much information) but safe to say the redundancy issue is only a tiny thing they looked at.

They basically recommended to increase the ex-gratia amount and ditch the voucher. However, they do actually advise a voucher for some people, so this was really why I was very confused. Why some and not others? I don't have a direct line to the advisor so my questions have gone through someone else and may have been lost in translation.

I actually am pretty well versed in payroll also so I am aware of the different methods of calculating the ex-gratia amounts. In all the tax classes I ever attended, you would always be told to make sure you limit the tax exposure. The first thing you do when distributing money is take advantage of the tax free options. Furthermore, my wife is also an accountant who works in a tax practice and she is doesn't understand why the advice is to increase the ex gratia amount and ditch the voucher payment. Another accountant in the company is actually asking the same questions as I did.

I have since seen a screenshot of their workings where it seems that they have worked out the 10,160 + 765 PYS for an individual and advised to reduce the proposed ex gratia amount by about €50 (still to be paid but taxable) & leave the 1k as a voucher. But but they didn't even add the 10k despite this person having not received a lump sum ever in the past and will not be getting a lump sum pension payment (not even in the scheme), nor did they look at the SCSB. 🤷‍♂️. I'm beginning to think that redundancy might not be their specialist field 😆

Nobody here is hitting any limits (with the exception of the poorly calculated example above) and to be fair, are all quite far off them. We came to the conclusion that the logic is that because limits aren't being hit, pay it ex-gratia. Possibly the advisors don't understand the voucher that is being offered is so universal that it is as good as cash.

In fairness, employer is very good at doing right by staff so are happy either way.

I do agree with you that it is a drop in the ocean and not really worth worrying about as it is likely to never be an issue for most involved here. But as I say, it does seem to go against the grain of all the tax classes I have ever taken (and I've been in more than my fair share 🤣) and this is really why I'm curious.

I know someone who was recently made redundant from a big firm with only about 6 years service and got a ridiculous amount of money, so you really never know!

At the end of the day, who want's to pay tax when they don't have to…..