# PHI Payments - Are they taxable?



## horusd (15 Jul 2011)

Helping a friend at the mo who is on PHI payments following an accident a few yrs back. He's also on disability from welfare. I noticed that his P 60 doesn't seem to take into account his PHI monthly payments? Are PHI excluded from taxation? I wouldn't have thought so,but he tells me he's never paid tax on it. It's paid via his old employer, but the Irish Life seem to pay it via them, and it looks like they never deducted tax. Is this right or should his old employers have been deducting tax all along? 

As a side issue he lives in social housing. Is the PHI eligible to be disclosed as income? Again I would have thought so, but he hasn't declared it! 

I don't want to frighten the life out of the bloke, but I would have thought he should have been paying tax and should have disclosed the PHI to the Council. Am I right?


----------



## Baracuda (15 Jul 2011)

It sounds like your friend is part of a company PHI scheme where Irish Life pays his employer gross, it is then up to his employer to operate PAYE if they do not do so they are breaking the law! He is still an employee of the company otherwise he would not be able to claim the benefits. He is also obliged to disclose this income to the Council/Corporation. 

Not good enough that this is going on when so many cut backs are taking place in Ireland...


----------



## horusd (18 Jul 2011)

Thanks Barracuda, I am getting confused about this issue. I just got a recent "payslip" from him which shows PHI as a payment. He is now paying PAYE (altho this must be recent, maybe since last budget- he insists this is a change) and also paying the USC charges. So maybe the budget changed things? From looking on google, I see in the UK that PHI, if the premium was paid by the insured alone, seem exempt from tax. I wonder if this is similar here?

Regarding the social housing declaration he made, he seems to think that PHI, as it is not a pension, income, then it's not disclosable. I had a look online at the declaration form used by the council and it seems to be asking about income and pensions. For me it is splitting hairs as to whether PHI is different. At the end of the day it's a kind of income, but I have to allow that maybe it is? Does anyone know what way this would be viewed officially?


----------



## Baracuda (18 Jul 2011)

PHI payments are and always were subject to tax, prsi, old income levy and now USC. A persons tax credits and income bands UHC/PRSI thresholds is applied to PHI payment as it is paid under the PAYE system so perhaps if this income was below a certain level last year he would not have paid tax??? However any social welfare benefits he is getting on top of the PHI benefit should also be included as this income is also taxable. This could come back to haunt him at some stage if he is not declaring this to reveneue or his employer. 

PHI is PAYE income full stop, it is not a kinda!  He must declare this to the council as income. 

What your friend is doing is wrong whether he knows it or not, we are too quick to look the other way when we know that they are defrauding the state and they are acutally taking money away from other vital services such as the like of Roscommon Hospital. Tell your friend that he could get into serious trouble over what he is doing.


----------

