Is my tax credit for an income continuance policy too low?

D

Dr Strangelove

Registered User
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1,478
I am a top-rate taxpayer, all income is PAYE from a single employer.

I have an income protection plan with Aviva with a premium of €1,000 a year.

I have logged this policy on PAYE Anytime and I see a tax credit of only €200. Shouldn't I get a credit of €400 as a top-rate taxpayer?

Revenue guidance doesn't mention standard-rating:

 
The benefit from tax relief at 40% are sometimes given in two ways:

(1) increase in tax credits

AND

(2) increase in SRCOP

Look at the Cert of Tax Credits to check whether this is the case.
 
Thanks @Protocol - I checked and my certificate and you're right my Rate Band 1 has been increased from €42,000 to €43,000

So I get €200 by way of a tax credit and then am taxed on at 20% instead of 40% on €1,000 more of income for another €200.

So €400 in total which sounds right.

Stupid question: why do they do it this way?
 
Doing it that way means that you get the relief at 40% if you're paying the higher rate and if you're only paying the standard rate, the change in rate band won't have any effect and you'll get the relief at 20% from the credit change.
 
I understand now. That’s why it’s all credits and no adjustment to SRCOP for medical expenses because I only get relief at the 20% rate.
 
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