BIK calculated incorrectly (do I have a case)

R

romahony

Registered User
Messages
15
My employer pays my full VHI. They have been deducting a BIK from me for this. So it turns out that they calculated incorrectly and it is against the high rate of tax instead of the BIK rate. Now they have set it right but I am only able to claim back the last 4 years of adjustment from the tax office. I have asked payroll how did this happen and who is responsible for the issue. I got a reply stating that "The responsibility is on me to check my paycheck". Is this right. I rang citzens advice and they didn't have an answer for me also.
 
Actually what they say is "The onus is on the employee to make the revenue aware of this BIK."
 
What is a BIK rate?

If you mean that you didn't get the relevant extra tax credit for the VHI then yes, the onus is on each employee to ensure that their tax credits etc are correct

In fact, Revenue won't even tell an employer how their employee's tax credits are broken down because it's none of the employer's business.
 

I think the BIK rate is 20% so I got charged 41% instead. Its a big oversight from a company that employees over 3k people in Ireland I think.
 
All BIK is taxed at your top rate, NOT necessarily the 20% rate.

However with VHI (and all Medical Insurance) you get an extra tax credit worth 20% of the gross premium so the effective PAYE rate is actually reduced to 21% (assumeing you pay tax at the 41% rate)

For example:
Gross Premium = €1,000
BIK = €1,000
PAYE on BIK = €410 (assume 41% tax payer)
Extra Tax Credit = €200 (€1,000 @ 20%)
Total PAYE paid = €210 (€410 less €200) which equates to 21%

However if you have not received the extra tax credit then you will have paid tax at the 41% rate

As I stated earlier it is up to each taxpayer (not their employer) to ensure that they have the correct tax credits etc
 
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