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Director and vhi

  • 01-10-2018 8:35pm
    #1
    frankythefish
    Closed Accounts Posts: 339 ✭✭


    Hi folks, I am a company director and my health insurance policy is up shortly and it was suggested to me that I put it through my company. I am unsure if there is any benefit to doing this though. If anything, I d imagine it simply results in more work when running payroll. Any feedback appreciated


Comments

  • #2
    namenotavailablE
    Registered Users, Registered Users 2 Posts: 59,703 ✭✭✭✭namenotavailablE


    Essentially you would need to compare these two values to see the savings:

    * Option 1: Treat the premium as a BIK. In this instance, you get the insurance in return for paying extra PAYE, PRSI and USC on the BIK. This could possibly be 40% PAYE +4% PRSI+ a max of 8% USC = 52% of the gross premium. You would deduct the TRS from this (you'd need to claim this yourself- it won't be automatically granted for a BIK scenario) which could represent a tax credit of up to €200 to get the net overall cost to you.

    * Option 2: Pay the net cost of the premium yourself- basically the gross premium less a max of €200 TRS.

    Free Excel net pay calculator- https://taxcalc.eu/monthlyss/Employee%20PAYE%20calculator.xlsm



  • #3
    Heisenburg81
    Closed Accounts Posts: 322 ✭✭Heisenburg81


    namenotavailabl wrote: »
    Essentially you would need to compare these two values to see the savings:

    * Option 1: Treat the premium as a BIK. In this instance, you get the insurance in return for paying extra PAYE, PRSI and USC on the BIK. This could possibly be 40% PAYE +4% PRSI+ a max of 8% USC = 52% of the gross premium. You would deduct the TRS from this (you'd need to claim this yourself- it won't be automatically granted for a BIK scenario) which could represent a tax credit of up to €200 to get the net overall cost to you.

    * Option 2: Pay the net cost of the premium yourself- basically the gross premium less a max of €200 TRS.

    Plus in Option 1 the Gross Premium Value @ 12.5% corporation tax saving needs to be factored in less 20% TRS Tax outlay to be paid to Revenue with the CT1 return.


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