Tax Relief on VHI

[bellandbear]

Hi everyone just a quick question. Just after finding out that I can claim relief on my Medical Insurance. I had thought that it was just my employer. He paid the VHI from our wages but he didnt pay any of it for us. So if my medical insurance was 2,000.00 for last year do I get a tax credit of 400.00. How do I go about getting it. Do I have to ring Revenue about it. I havent claimed this relief in about 4 years. My friend was on PAYE anytime and she has this relief although in my PAYE anytime there is not even the option for this relief.

 

[porterbray]

Tax relief on medical insurance is mostly under tax relief at source. If your employer pays it as a Benefit in Kind, you are not eligible for tax relief. If it is just paid through your wages (i.e. you are paying it, just deducted at source by your employer) the relief should be given under tax relief at source. Your local Revenue office should be able to tell you if you are claiming it, and if you are not, how to go about it.

 

[noel 2006]

Tax relief at source means that the tax credit is paid to the VHI (or other company) by the Revenue Commissioners on your behalf. You are then charged the premium less this tax credit. If you look at your VHI bill you should be able to see if you have got the tax credit.

 

[DB74]

If your employer pays your VHI then it should be put through your payroll as BIK. You then pay tax on it at your marginal (highest) rate

You then receive an additional tax credit equivalent to 20% of the Gross Premium which is spread over the tax year.

If you do not have this credit on your tax credit certificate then you should contact Revenue and ask them to put it on your cert of this year.

You can also go back max 4 full tax years (2006 is the last one you can claim for now) and receive a refund of 20% of the Gross Premium for each year.

 

[Ludi]

BIK does not apply in this case. The employer is only facilitating the employee by paying his VHI premium from his wages. The employee is still paying the premiums. Tax Relief at Source (TRS) is applied to the premium by VHI. In essence you pay less of a premium to VHI. i.e your premiun before TRS was €1000, TRS granted at standard tax rate of 20% so therefore your TRS allowance is 20% of €1000 = €200. So your premiun is €1000 - €200 = €800.As noel 2006 said it will be stated on your renewal certificate.

 

[Conshine]

I have a related question - At my place of work, there are choices of medical insurer.
The company pays all of the cost and it appears as BIK on my payslip.
If one insurer is cheaper than the other, would that affect my pay at all, considering the company is paying for this?
If I was to choose the cheaper option, will my net salary go up?
Or does it balance out the same?