# Benefit in Kind



## FionaL27 (28 Jul 2011)

Hi,
Could someone explain to me bik on health insurance. Im a single parent on 40kpa. The company pays my health insurance for myself and dd which amounts to €1127.46. I checked my payslip today and I can see I was deducted €100 for bik would this be correct?

Thanks


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## Sunny (28 Jul 2011)

I think that just means you are liable for €100 BIK and you get taxed on that i.e. your taxable income is increased by the €100.


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## DB74 (28 Jul 2011)

If your employer pays your Health Insurance then you should get an additional tax credit worth 20% of the Gross amount of the cost of the insurance

Make sure you are getting this by checking your tax credit cert and/or ringing Revenue to ask them


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## ddmani (12 Aug 2011)

I'm wondering about the same. Been offered a new job with some benefits, heath insurance + pension. I understand that pension is tax free. Will be taxed of course whenever I cash it in.
Am I right in saying that the Health Insurance will be added to my income, then tax as a whole deducted? I've had a look at taxcalc.eu and with my expected salary, tax is €96. With health insurance on top of this, can I expect to pay much more tax?
Sorry if there's an easy way to calculate it. Never been in this situation before.


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## capnhand (12 Aug 2011)

Hi

It depends on how the scheme is set up.

If the health insurance is IN ADDITION to your salary then it is a BIK and you claim an additional tax credit. Note that the BIK is on the gross payment to the health insurance ie plus the 20% allowed at source by the government. (There are other adjustments to the corporation tax comp of the company itself which i dont think are relevant here)

If the company is simply paying over a portion of your net income to the health insurance provider and is just PART OF your salary then it is not a BIK. But you dont get the additional tax credit because it is given at source by the government.

Hope this helps

capnhand


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## ddmani (12 Aug 2011)

Thanks for reply. It would be in addition to my salary, so I'm guessing tax on it would be negligible? I'm a single male so can't see insurance being any more than 1000


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## trg (9 Nov 2011)

Folks,

Just on the operational side of the PAYE. Is the gross value added to the gross salary whenever the insurance is paid? or is it split every month? 

If done when paid I assume that the take home pay for that week/month would be reduced a lot. That said it probably wouldnt be possible to add an amount every week/month as the premium wouldnt be known.


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## WindUp (9 Nov 2011)

usually it's spread over the year- it is known as it is paid in advance


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## Mizen (9 Nov 2011)

Does the amount of med Insurance form part of ones gross salary then i.e if the salary was 50k say and the med ins was 1000€ paid for by the Company does it mean your gross salary becomes 51k ??   if it doesnt, how is it explained.

regards


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## WindUp (9 Nov 2011)

on your p60? yes it is part of gross salary


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## flossie (9 Nov 2011)

My company pay 50% of my PHI (i.e. I go and get my policy, submit the expense to the company and they put 50% back into my pay each month). However, this is then taxed at 42%......does this sound right?


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## elcato (9 Nov 2011)

> My company pay 50% of my PHI (i.e. I go and get my policy, submit the  expense to the company and they put 50% back into my pay each month).  However, this is then taxed at 42%......does this sound right?


yes - so you benifit by roughly 50% of 50% in total. So for example, you pay 1k for PHI, they are willing to pay half, 500 which is classed as BIK so you are taxed as if you got paid an extra 500 @ 42% plus PRSI and USC. You net a saving of about 250.


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## flossie (9 Nov 2011)

Thanks....it used to be refunded through expenses. Oh well!


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## theresa1 (5 Feb 2013)

I just got my Amended Tax Credit Certificate for 2013 and it includes a Medical Insurance Relief of €228.

My company pays my VHI in full. I checked my VHI Notification of Renewal for period 01/08/2012 to 31/07/2013 and it states Gross Premium €1305 and Tax Relief At Source €261.00 and Net Premium was €1044.00.

Should my Medical Insurance Relief be €261?

I thought I understood how this work's but obviously I don't. A few year's back I applied and got some money back from revenue. Should I apply again or is my Tax Credit Cert. correct?


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## ctlsleh (11 Feb 2013)

I have the same issue as Theresa1..... My company pays for my medical cover in Full. Should i be getting tax credits at 20% of the Gross premium or not at all if relief is at source? 
If relief is at source and my company is paying the full amount for the cover, how do i get it at source or does the relief go to the company, which would make sense...?
thanks......i also thought i understood this.....clearly not! 
If we take an example of someone whose Gross Premium is €1000 for example, where the company pays that in full, could someone indicate how this should work for credits? much appreciated.


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## Bateman (11 Feb 2013)

Premium is €1,000.

Company gets a bill for €800 (i.e. net of TRS).

The BIK is €1,000 so payroll taxes are applied to €1,000.

The company repays the €200 TRS to Revenue on submission of its corporation tax return.

The employee is entitled to a credit of €200 which he/she should ensure is reflected in his/her tax credit certificate and/or income tax return.


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## mandelbrot (11 Feb 2013)

How it is SUPPOSED to work is that the employer charges you BIK on the Gross premium - in this case €1k.

They actually only pay €800 to the insurer, and they are supposed to pay the other €200 to Revenue on their corporation tax return.

The employee is then entitled to the credit for the TRS on their tax credit cert, so that's 20% of the gross premium.

*However *what quite often happens is that the employer pays the net premium to the insurer, charges BIK to the employee on this amount, and hence when the employee gets their tax credit cert, it shows a credit for 20% of the *NET *premium, as this is the amount they've been subjected to BIK on.

So in Theresa1's case above she will probably find her employer has only charged her BIK on €1,044 rather than the gross premium of €1,305. This means that she will have underpaid tax, as her income through payroll has been understated by €261.

The issue of this potential underpayment has been discussed recently here:
http://www.askaboutmoney.com/showthread.php?t=176495


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