Taxation of VHI. Error?

Swaine

I started a new job at the end of January that offered free Healthcare.

It's just for myself and my annual premium is €1349.80.

Below is how I'm being taxed on it and it seems very high. Others in my job are seeing different numbers. It seems I'm being taxed a monthly amount every week?

Thanks for any advice.

mistress_gi

It looks to me like you are charged but your job subsidises most of it. If you subtract the subsidy minus the tax you actually gain 18 euros. I am open to correction though

Swaine

https://www.boards.ie/discussion/comment/119001276#Comment_119001276

I'm no expert but from my perspective I'm paying 40% plus USC on that 139 so getting about half of it but then 121 is deducted on the other side. All very confusing.

This cannot be right. There's people in my job with 5 people on their plan and not paying as much as me.

namenotavailablE

The figures on your payslip don't make any sense based on what you're saying is the premium.

The correct treatment should be to add 1/52 of the full annual premium (this is the amount before any tax relief at source (TRS) for private health insurance is deducted) to your gross income each week. It isn't entirely clear if the €1349.80 is before or after deducting TRS (€200 max per year if it's just for yourself) but on the assumption that the €1349.80 is the gross premium, you'd expect to see €25.95 added (1349.80/52) instead of €139.29. This amount is then subject to tax/PRSI/USC. The exact same value (€25.95) should then be deducted from the deductions side (this is because you're not actually receiving the net cash value of the premium in your net pay).

Your best bet is to approach the payroll staff and ask about the treatment which is currently being applied. Here's a Revenue.ie link (only an OK explanation of what is supposed to happen on that page to be honest but it's 'official'):

https://www.revenue.ie/en/employing-people/benefit-in-kind-for-employers/valuation-of-benefits/payment-medical-insurance-employees.aspx

ari101

VHI subsidy for BIK should be on 1/52th per week if you are paid weekly. If it is fully subsidised there should be no net deduction, this does not look right to me based on your understanding.

Edit: Looking at this again it may just be a strange presentation of adding for BIK and removal at a different rate, often you would show the amount for BIK but not include it in the sum or show the removal (normally at same amount) on a payslip. A strange one, the amount does still seem wrong though.

CramCycle

They are giving you 139 a week for VHI and taking 121 out for payment. Presuming there is a balance in taxes to account for the difference, it doesn't look you are losing but your company (if weekly and not monthly) are paying out far to much.

Sonics2k

I have a thread on this exact issue, albeit with a different employer and health insurance company.

Swaine

https://www.boards.ie/discussion/comment/119003529#Comment_119003529

You got a link?

Sonics2k

https://www.boards.ie/discussion/comment/119009483#Comment_119009483

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

Swaine

https://www.boards.ie/discussion/comment/119009492#Comment_119009492

Thanks. Pretty much the exact issue I'm having. From my rough calculations I'm paying €51 a week for my health insurance.

Definitely a mistake, emailed the fecking useless payroll department and no reply as of yet.

Citrus_8

https://www.boards.ie/discussion/comment/119009517#Comment_119009517

There are a few approaches. Tax relief at source (TRS) or Benefit in kind (BIK) and you get back 200 Euro from Revenue claiming tax return next year through my Revenue online.

Normally TRS is not applied with a payslip when employer pay insurance for an employee. And the employee should claim either 20% or 200 Euro (adult), whichever is less.

BIK

PRSI 4% off the Medical insurance annual price (divide to 52 weeks to have a weekly figure) 53 Euro a year

PAYE 20%/40% off the insurance price, depending on your annual income. Which is your rate can be found searching PAYE 2022 rates 270/540

USC 4.5% for salaries between 19,874-70,044. 61

= 384 / 654 Euro

per week 7 / 13

This is only an extra tax to already existing of what you'd normally pay

That VHI 121.64 could indicate you have 2 adults and a child on your insurance which is 1349.80 x 2 and something on top of that for a child.

It seems that 139.29 is applied incorrectly as you'd be paid fortnightly. 139.29x26 weeks = 3,621.54. 1349.80x2 adults=2699.64. I could guess 3,621.54-2699.64=921.90 is for child(ren), but it's just a guess and I will be very interested to know what your Payroll team will say.

Swaine

Got this sorted, they wouldn't tell me exactly what error they made but they admitted they made a mistake. Refund on the way and no more payments for the year as I had the yearly fee paid in 12 weeks such was the overcharging.