BIK on VHI

[Katchit]

I am a member of the VHI group scheme where I work. On my policy there is cover for myself, my husband and two children. My employer pays part of my portion and the remainder is deducted from my wages and paid over to VHI.
Just recently it has come to my attention that in order for the payroll dept to calculate the BIK, they are grossing up the entire premium.
So, VHI tell me the total annual subscription is €2024 and my employer has agreed to pay €448 for me. Payroll are grossing up the 2024 to 2530. They say they will pay 2024 over to VHI and 506 to Revenue (diff between 2024 and 2530). They will operate PAYE/PRSI on €561 (I don't know what this figure is). And they will deduct €1969 from me for the rest of my family. They then told me I can claim a tax credit of €506 from Revenue.
My question is firstly, is this the correct method of calculation? And secondly, why is the total premium grossed up when the only benefit I am receiving is €448.
Any advice would be appreciated.

 

[extopia]

Sounds like it might be correct. (NOTE, I am no payroll expert).

VHI subscription is net of 20% tax credit (you're entitled to a credit on the total family premium) so the grossed up figure of 2530 is correct (2024 is 80% of 2530).

Your employer is similarly grossing up the 448 to 561 - that's your personal benefit in kind. Then as you are responsible for the meeting the balance for your other family members they are deducting this from your salary.