Health Insurance BIK

Marty McFly

Hi

Many thanks for taking the time to read this.

Okay so I've been told in my job I can get health insurance paid for me and my family by my company.

For cover with myself, partner and two kids it comes to the value of 3916 per annum. Showing up on my payslips as 326.26 per month.

It all sounds good but I'm trying to find out to what extent will I be taxed on it? How much a month will I be less off after tax?

I don't want to take it and end up with a shock when I see my next payslip.

Any advice is greatly appreciated.

amcalester

Marty McFly wrote: »

Hi

Many thanks for taking the time to read this.

Okay so I've been told in my job I can get health insurance paid for me and my family by my company.

For cover with myself, partner and two kids it comes to the value of 3916 per annum. Showing up on my payslips as 326.26 per month.

It all sounds good but I'm trying to find out to what extent will I be taxed on it? How much a month will I be less off after tax?

I don't want to take it and end up with a shock when I see my next payslip.

Any advice is greatly appreciated.

Whatever your marginal rate is, so probably €165 a month extra in tax.

namenotavailablE

You should be able to claim the tax credit for TRS on the gross premium to reduce the above amount- see the example at the bottom of this page

Cloudio9

You can be sure that if the civil service offered vhi as a benefit it would be tax free.

ducie

Hi. I have an option to sign up for health insurance at work. Premium is €1,254 of which employer will pay 75%. I have 2 questions.
How much will BIK be?
How much will I pay in tax for this?
Thanks!

wally1990

ducie wrote: »

Hi. I have an option to sign up for health insurance at work. Premium is €1,254 of which employer will pay 75%. I have 2 questions.
How much will BIK be?
How much will I pay in tax for this?
Thanks!

The tax relief is already granted at source so the premium as mention will be net of €1254



If 75%is payable by the employer then the BIK 940.5 in which you pay additional tax per year

This value is added to your gross salary and you are taxed on it and the amount of tax deducted is dependent on your annual salary if can be up to 52% so limit if 489.06 additional tax max or €40 a month (max)

You will be paying the 25% from your take home salary

The main benefit here to you is the employer paying the 940 because based on 52% tax rate you’d have to earn €1807 extra per year to afford the €940 .. as an example

ducie

wally1990 wrote: »

The tax relief is already granted at source so the premium as mention will be net of €1254



If 75%is payable by the employer then the BIK 940.5 in which you pay additional tax per year

This value is added to your gross salary and you are taxed on it and the amount of tax deducted is dependent on your annual salary if can be up to 52% so limit if 489.06 additional tax max or €40 a month (max)

You will be paying the 25% from your take home salary

The main benefit here to you is the employer paying the 940 because based on 52% tax rate you’d have to earn €1807 extra per year to afford the €940 .. as an example

That is the best explanation I've seen on the Internet yet.
So based on above I would pay €793 per year?
But then can I claim tax relief on the €489.06?

myshirt

Wally if you are not an accountant you should be. Bang on the money there son.

wally1990

ducie wrote: »

That is the best explanation I've seen on the Internet yet.
So based on above I would pay €793 per year?
But then can I claim tax relief on the €489.06?

Yes you will pay €793 maximum

This is €40 additional tax per month x 12 month so €480

(assuming you are paying up to 52% tax)

This €480 is the max

Plus

€313 which is 25% of the policy you must pay yourself

Tax relief is different...

So the policy is €1254 which is the amount including tax relief.

This all changed for policy’s taken out after October 2013 that insurance companies give the tax relief at source

You are missing out of 75% of the tax relief available

Which is 20% up to €1000 (which is the limit, the €254 is extra is irrelevant)

So €1254 x 75% = 940 which is what your employer pays

€940 x 20% relief = €188

Following the end of the first year of payments Ask your Finance department to send official confirmation of the Medical insurance amounts paid on your behalf by Your employer on headed paper or via a statement to you

The Revenue will request this to apply the medical insurance tax credit to your Tax credit cert

It is worth up to €200.00 or 188 in your case per year tax saving to you.

The letter must be sent to : SWPAYE@Revenue.ie with your pps number

..... you are already getting your tax relief when paying the 25% remember because it was already included when taking out the policy so you can’t claim the difference to €1000 limit


The €188 will be added to your tax credits in 2020 for example or just after you make the application this meaning you will pay €15 less tax per month (or €188) a year

.....
So the €793 policy is now only really cost €605 (maximum) in hard cash because of the tax back/relief buts its worth €1254 so that’s all good

wally1990

myshirt wrote: »

Wally if you are not an accountant you should be. Bang on the money there son.

I’m not an accountant but have an interest in tax and finance
So I am
Starting to train though in it at age of 28

ducie

wally1990 wrote: »

I’m not an accountant but have an interest in tax and finance
So I am
Starting to train though in it at age of 28

Yes. Much appreciated