health insurance tax question

awec

Hi guys,

I only recently moved to Ireland from the UK and so health insurance is for the most part totally new to me.

My employer provide health insurance cover and they pay 100% of the premium.

However, I am told that I will be taxed for a benefit in kind from my wages for this.

I am wondering (I'm not even sure if this is a good question) what sort of figure we are talking about here tax wise on a monthly basis? Less than 100euro? More? Obviously not looking an accurate figure but more just the sort of region that it tends to be.

Apologies if this is the wrong forum, it was a coin toss between this and the tax forum.

Thanks!

coylemj

It depends on the premum your employer is paying which in turn is dependent on the level of cover so it's not possible to give a direct answer to your 'how much' question.

This is from the Revenue Comissioners website...

Where the employer pays the full premium for employees and the employee does not make good any amount to the employer, PAYE and PRSI must be applied to the gross (pre Tax Relief at Source) premium. To ensure that the employee is granted the relief afforded by TRS, the employee will be given a tax credit (at the standard rate) for the gross premium in his or her certificate of tax credits.

'TRS' refers to 'Tax Relief at Source'. Let's say your employer is paying a gross premium of €1,000 p.a. and you pay PAYE (income tax) at 41%, this means that you have a benefit of €1,000 on which you need to pay €410 (plus social insurance but I'll just deal with the income tax).

However if you were paying the premium yourself, you would be entitled to tax-relief at source at the standard rate (20%) meaning you would only have to pay a net premium of €800 for a gross policy cost of €1,000 so the tax man will give you a tax credit of €200 which your employer will apply through the payroll.

So ask your employer for the gross premium and the net cost to you will be the gross premium multiplied by the difference between the top rate (41%) and the standard rate (20%) of income tax, in this case 21% plus whatever rate you're paying for social insurance (PRSI) and the USC.

Grecco

I have a similar question

I currently an receiving VHI for myself and family. This is paid for 100% by the company but I have to pay the BIK. I was told that the value of the VHI is €3400, I am currently paying nearly €73 a week BIK tax for this.
I cant understand this as it seems the BIK tax is more than the value of the VHI policy!!!
Roughly what should I be paying, even at the top rate of tax ??
My salary is €57000
I have mine and my wife's Tax free allowances

coylemj

Grecco wrote: »

I have a similar question

I currently an receiving VHI for myself and family. This is paid for 100% by the company but I have to pay the BIK. I was told that the value of the VHI is €3400, I am currently paying nearly €73 a week BIK tax for this.
I cant understand this as it seems the BIK tax is more than the value of the VHI policy!!!
Roughly what should I be paying, even at the top rate of tax ??
My salary is €57000
I have mine and my wife's Tax free allowances

Depends on whether 3,400 is the net (after TRS) or gross value of the premium. Is the €73 a line item on your salary slip or have you worked out that you're paying €73 more than you should?

Grecco

coylemj thanks for getting back to me, sorry for bothering you about this. Anyway
The gross value of the premium is €3400
€73 is the amount deducted on my payslip

Whats bothering me is that it seems to me that I could be better off if I wasn't receiving the company VHI as I could buy it myself for less than what it costs me in BIK tax from my wages, thus is my employer is just wasting money ???

coylemj

A gross premium of 3,400 would cost 2,720 net after TRS at 20% so you appear to be paying too much. However I can't advise you without seeing exactly how it appears on your salary slip so I suggest you talk to someone in your HR department and ask them to explain the numbers.

Grecco

Will do,
Thanks for that.

wmpdd3

try this:

http://taxcalc.eu/

you can add a BIK at the rate you have stated above.

Arciphel

Your employer doesn't get the TRS and neither do you, you have to apply for it to revenue. You only get the TRS when you pay the policy yourself.