Benefit-in-kind query: VHI and club subs

Just accepted a job offer today, so will be changing jobs and employers at the end of the month .

New job has great perks-two of which are:

1. Employer pays full cost of VHI Plan B
2. Employer pays club subscriptions to a max of €635 p.a.

Never had to worry about BIK before (cos never had BsIK.....), so do I just add the cost to the employer of the VHI and club subs (assuming I avail of both) to my salary and compute tax in normal way (i.e. effectively treat both as additional income)?

I pay tax at the higher rate, and will be over the PRSI ceiling on the salary alone, so I assume the tax liabilty on the VHI and clubs subs is effectively the cost @ 42%+2%????

For the VHI you add the amount that the company pays to your gross as if they were paying it as salary to adjust for the BIK income tax and PRSI/health levy liability. As far as I know employers are obliged to deduct this through payroll so you won't have to calculate, declare and remit it yourself but it will be taken care of automatically. At least that's how my employer does it! Note however that you can still apply for the private health insurance standard rated tax credit and you will get this by way of adjustment to your tax credits since you are not getting it at source when premiums are paid to the insurer. See [broken link removed].

For the club subs the same will apply without the tax credit issue unless this is a benefit to all employees in which case it may be exempt from BIK. See section 10.5 [broken link removed].

Not sure where you're getting 42% + 2% but note that your income tax is 42%, your PRSI (up to the PRSI ceiling) is 4% and the health levy is 2%.

[broken link removed] on the tax/PRSI treatment of various BIKs might be of interest to you.

Thanks Clubman. Had looked at the revenue.ie Guide already, but just wanted to double check my interpretations.

The PRSI ceiling is €44,180, my salary is above the ceiling, and so I presume that I will only by liable for health levy (2%) and PAYE (42%) on the BIK amounts, hence the 42% +2%.

OK - I get the gist on the 42% + 2% now. Check if your employer will be deducting tax/health levy on the VHI premiums through payroll (as I believe they are obliged to do these days), apply for the tax credit and check if the club subs are BIK exempt or not.

AFAIK the club subs are for a club of my choosing, and so tax is assessable on the full value.

Thanks again.

yea, don't forget to ring revenue and apply for the tax credit of the value of VHI payments....you need to do this manually in the case where your employer pays VHI for you...they pay the gross amount to VHI, you pay BIK on the gross amount...you will then get a credit at stanard rate for the gross amount...
so if premium is 1000 euro gross...in your case you'll be paying 440 euro of BIK(42% + 2%) and you'll receive a credit of 200 euro(20%).

So it costs you 240 euro, whereas paying the premium yourself would cost you 800 euro(as you'd only pay the net amount due if paying as individual)

Tis early so hope my calculations are correct!

The 44K PRSI limit is a cumulative figure so if paying BIK through payroll, you will pay full PRSI up to this limit and 2% thereafter. CCOVICH, in your case you will reach the limit earlier. So in the first few months you will pay more PRSI and less towards the end of the year. The overall annual effect is the same.