H&D BiK overcharging

Sonics2k

Hi folks,

Not great at working these things out, but looking for some potential clarification on this.

I joined my companies healthcare policy via Irish Life earlier this year after seeing it was a good deal. However, after going over my last few payslips every two weeks I have a H&D BiK of €114 (paid fortnightly). I rang the broker who handles it, who reached out to Irish Life who confirmed my rate should only have been €50.60.

The breakdown is like this:

Health Insurance Premium: €1378.80

Company Pays: €1328.20

You Pay: €50.60.

I double checked my payslip, and double checked with colleagues who are all paying a BiK that comes out as nearly twice the policy price in tax annually.

A quick bit of pen and paper math worked out my annual H&D BiK at €2736.

Now that can't be right surely.

namenotavailablE

Do you have any other BIK supplied by the company e.g. company car?

ari101

That doesn't make sense if it is for the health insurance only for one person at the rates given.

I'd expect to see 1328.2/26 BIK and 50.60/26 after tax deduction.

Often health insurance is billed to the company monthly, has some one is payroll processing accidentally applied a monthly charge from the health insurer to every payroll rather than recalculating... (1378.8/12 would equal 114.90)? Hopefully not and there is a reasonable other explanation.

Ask HR/payroll to explain what it comprises/how it is calculated.

Sonics2k

https://www.boards.ie/discussion/comment/119000677#Comment_119000677

No, nothing like that.

https://www.boards.ie/discussion/comment/119000775#Comment_119000775

If it matter, the policy cover my two children (15 and 12) but surely that wouldn't be part of this. I've spoken to colleagues who've no gone over their own recent pay slips and also seen high amounts under H&D BiK.

I've contacted the company payroll, but with the bank holiday I don't expect to hear back until Wednesday, giving Tuesday for them to play catch up.

Bannasidhe

Back of envelope calculation here:

If this is your only BIK your tax liability is on 80% of gross premium (check on your tax credit cert that the 20% credit has been applied)

so - annual premium 1,378.80 gives a tax liability of 1,103.04.

Assuming a rate of 30% based on bik for cars - your annual tax should be 330.912.

Currently you are paying 228 a month.

Open to correction here, haven't done payroll for a few years.

ari101

Children are not free over 1 year of age, I think under 18s often cost somewhere between 25-50% of an adult policy cost for the first few. If your company is subsidising their cost, that is also a BIK liable amount. If for example they cost 50% of your price then that might not be far off what your should be incurring tax on.

Re: bannasidhe's calc - the notional pay should be based on the gross not net cost of the policy, which is why the TRS credit is added to tax credits to offset. If the OP is on high rate taxes the BIK will impact them at the high rate of 48.5%-52% not 30%, impossible to estimate this without knowing their salary and TCC details. The 228 every two forthnights is the amount of notional pay added to calculate BIK tax on same, not the amount they pay.

Bannasidhe

https://www.boards.ie/discussion/2058243748/h-d-bik-overcharging

https://www.boards.ie/discussion/comment/119001626#Comment_119001626

Looking at the OP they state the gross premium per year is €1378.80.

Even if we take this as 100% liable for bik tax it makes no sense for the OP to be paying (their figure) €2736 a year.

They are currently paying €114 every two weeks (26 x 114 = 2,964).

If they were to consider 100% of the gross premium of €1378.80 as liable for bik, taxed at rate of 50% = 689.40 (26.51 per fortnight).

With the 20% tax credit applied we're looking at a bik liability of 1,103.04/26 - if that was taxed at 50% we get 551.52 (21.21 a fortnight).

OP is paying €114 a fortnight.

Seem to me that someone in payroll has made a mistake.