BIK on company paid Health Insurance

K

Kicker

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Benefit in Kind query:

My family health insurance is paid for by my employer.

Annual Health Insurance cost = €4,595

Since January I have been paying BIK on this health insurance of €478.78. I am on the higher rate of income tax.

Is this correct, it seems very high to me? It would be more cost effective to pay for the same health insurance myself.

Thank you in advance for you help with my query.
 
Is that the value to you on your payslip which is then used to calculate the tax cost or is it the amount of extra tax you are paying?
 
Hi 'Advice Pls'

A new line was added to my play slip in January that states
'BIK Health insurance €478.78'

This amount has been deducted from my pay each month since January 2013.
 
Is it on the side with your salary or your tax deductions? I'm not an expert but my understanding is if the amount is listed as you describe on the same side as your salary any overtime etc then that is the amount your tax is charged on not the actual amount that is deducted.
 
Hi,

The BIK figure appears to be correct.

Tax relief at source is applied to your health insurance contributions.

The €4,595 is net of income tax relief @20%. Therefore, your gross payment would be €5743.75 or thereabouts.

BIK is calculated on the gross payment, i.e. €5743.75 - divided by 12 since you are monthly paid.
 
€478.78 per month is €5,746.36 annually

VHI is paid net of tax relief at source of 20% - i.e. your employer pays 80% of €5,746.36 to VHI, which is €4,596.

Your employer is supposed to treat the gross amount, the €5,746.36, as additional pay, and tax you accordingly. I think you'll find this is what they are doing, rather than deducting the €478.78, they're treating it as income and taxing it.

You then need to make a claim for the 20% tax relief in your own right.

So assuming you're a high rate taxpayer, you'll pay 52% tax, PRSI & USC on €5,746.36. That's an additional €2,988 in tax you pay during the year.

But you're entitled to €1,149 of tax relief (€5,746 @ 20%).

So the net cost to you. of your employer paying for your health insurance, is €1,839 (€2,988 - €1,149).

A damn sight cheaper than paying the €4,596 yourself. 60% cheaper to be precise.
 
Hi,
Are you saying that one is entitled to claim something back separate to whatever your company is doing through your salary?
In my case I have the following (I am in the higher tax band):
VHI net cost is 977.40
On my payslip I see on the left (income) is "VHI Subsidy: 101.81"
on the right, I see "VHI: 81.45" and also "Med InsCoTx VHI: 20.36"
so total on right = total on left
And if 977.40 is net, then gross is 1221.75 and monthly this is 101.81

So the figures all match per your advice, but am I able to take any action to claim something additional back or is everything already taken care of?
 
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