BIK + VHI

F

Friartuck

Guest
hi all,

I've just taken over the role of wages clerk for a company. The company pays VHI for all its staff, plan b option. The full amount is covered by the company. How do I account for this in the employee's payslip? I have a spreadsheet from the VHI with the net annual figure per person and the gross annual figure per person. Which figure should I use in order that each employee pays the right amount of tax + PRSI on this benefit?

Thanks.
 
..

You increase the employees pay by the GROSS amount of the VHI payment. The employee then pays tax on their salary + this gross figure.
Then on the deductions side, where the pay is being decreased by the amount of tax due, you additionaly subtract the GROSS extra VHI payment that you increased the pay by.
So if your pay is 1000 in a month. Add on the VHI Plan B GROSS payment, circa €50. Calculate the tax due on 1050 euro.
Subtract back the 50 euro.

I had to correct our HR man in here, he had ben charging BIK on the NET amount only.....it should 100% be the gross.
BUT, make sure your employees know that they can claim tax relief for the VHI payment. I.e. they can claim a 20% relief on the GROSS VHI payment by rining revenue.
 
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