Most tax efficient way to pay health insurance as a self employed person?

hi all, just looking for some advice please.
I want to take out health insurance and I am self employed.
I understand there is a way of doing this through my business and then being charged BIK on my wage. Could someone please explain how this works because the revenue website gives a rough description of how the process works but still slightly confused after reading it.

If we assume the premium I am interested in costs 1200 per year (that's from viewing on the Laya website so I assume they've already deducted the tax at source on this amount) then do I basically tell them I want to use my company account for the direct debit and away we go, but what happens with the tax on my wage and is there a way of getting the tax relief at source like you can when you're an individual buying it privately rather than through a company?

And I assume the fact I'm paying through my business won't mean it doesn't count against my "community rating loading" ? Lastly, how do you show this on Thesarus when doing the weekly payroll?
Thanks in advance.

PS - Forgot to mention I'm Age 43 (44 in July), had health insurance for 9 years and 11 months on my parents plan September 2001- August 2011. Also had it with VHI from 98-2001 BUT now VHI are saying their records don't go back that far and cannot give me a letter saying I was insured so now I need to take it out to avoid the loading as I can't find any paperwork myself to price I had insurance for these 3 years. So am I right in thinking I do need this now to avoid loadings starting next year? I should have asked that at the start, sorry!

First thing first, are you a sole trader or an employee/director of your own limited company?

torblednam said:

First thing first, are you a sole trader or an employee/director of your own limited company?

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hi torbledam, thanks for reply. I'm a director of my own limited company.

Redder Than Red said:

if I have the audacity to ask my accountant a simple question I get an invoice the next day

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Do you expect your accountant to work for nothing?

T McGibney said:

Do you expect your accountant to work for nothing?

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No, of course not, that's not what I meant. I asked a one liner recently which received a one line reply and got a surprisingly high bill so I need to make sure I don't land them with a load of questions about a topic I know little about when seeking advice. I would need to be a little more assured about what I'm doing or attempting to do before throwing questions at them.
I'm really just looking for pointers at the moment on this because I don't know what I'm doing.
To answer your question I've no problem paying an accountant good money for good advice.

Redder Than Red said:

I asked a one liner recently.

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In professional practice, there is no such thing as one line advice.

T McGibney said:

In professional practice, there is no such thing as one line advice.

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My apologies if I have caused any offence T McGibney - I just wanted some pointers about this health insurance issue. My apologies if anything came across wrongly. My bad.

Redder Than Red said:

My apologies if I have caused any offence T McGibney - I just wanted some pointers about this health insurance issue. My apologies if anything came across wrongly. My bad.

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Absolutely no offence and I personally wouldn't even dream of charging on an itemised basis for every email, but at the same time I think it's important to be aware that professionals earn their living from selling knowledge and the provision of an email and/or phone support service always entails cost and effort on their part.

T McGibney said:

Absolutely no offence and I personally wouldn't even dream of charging on an itemised basis for every email, but at the same time I think it's important to be aware that professionals earn their living from selling knowledge and the provision of an email and/or phone support service always entails cost and effort on their part.

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Yes you're absolutely right. And in fairness they may not have spent long typing the reply but that of course doesn't mean they didn't take some time thinking about the answer. You're completely right. I have edited out the silly comment about the accountant from my original post now. It was a daft comment to make on my part.

T McGibney said:

Do you expect your accountant to work for nothing?

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My accountant is pretty good at offering ad hoc advice as part of the annual fee. But equally he will tell us when we should consult a tax adviser.

Redder Than Red said:

is there a way of getting the tax relief at source like you can when you're an individual buying it privately rather than through a company?

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In that event, you'll have to claim the tax relief in your annual tax return.

Far simpler in my opinion, to pay it yourself and enjoy the benefit of TRS

T McGibney said:

In that event, you'll have to claim the tax relief in your annual tax return.

Far simpler in my opinion, to pay it yourself and enjoy the benefit of TRS

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Thanks TMcGibney! But if company pays it would I end up paying approximately half of the cost from my own pocket (in tax) so cheaper for me personally? I think/hope I might have profits to use up from company whereas funds are tight from a personal point of view having bought a house last year etc. So I'd ideally have preferred to do it via the company. But if it gets messy with the tax etc then I might have to reconsider alright.

If you pay it through the company, the cost is higher as there is no discount (can't remember the proper term) and you get taxed as BIK on it. Just pay yourself the gross cost of it and pay it personally and get the discount.

Redder Than Red said:

Thanks TMcGibney! But if company pays it would I end up paying approximately half of the cost from my own pocket (in tax) so cheaper for me personally? I think/hope I might have profits to use up from company whereas funds are tight from a personal point of view having bought a house last year etc. So I'd ideally have preferred to do it via the company. But if it gets messy with the tax etc then I might have to reconsider alright.

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It actually works out neutral to you. I think if I remember correctly that you get taxed on it as a benefit in kind and then apply for tax relief.

Redder Than Red said:

Thanks TMcGibney! But if company pays it would I end up paying approximately half of the cost from my own pocket (in tax) so cheaper for me personally?

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It won't be if you're accounting for it properly under BIK rules.

Steven Barrett said:

If you pay it through the company, the cost is higher as there is no discount (can't remember the proper term) and you get taxed as BIK on it. Just pay yourself the gross cost of it and pay it personally and get the discount.

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The cost is higher but then you claim tax relief. It works out exactly the same either way.

Ah I see! Thanks everyone! I'm glad I asked now, so the best thing to do here is pay myself the cost via increased wage and just pay it myself then, yes?

time to plan said:

The cost is higher but then you claim tax relief. It works out exactly the same either way.

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The inherent risk here is that the director foregoes TRS and forgets to claim the tax relief in their personal tax return.

T McGibney said:

The inherent risk here is that the director foregoes TRS and forgets to claim the tax relief in their personal tax return.

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O absolutely. There's a simple way and a complex way. But they work out the same financially.

Conclusion: just pay for the health insurance personally.

Redder Than Red said:

Ah I see! Thanks everyone! I'm glad I asked now, so the best thing to do here is pay myself the cost via increased wage and just pay it myself then, yes?

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Yes. I have some sympathy. As a Proprietary Director who was previously a Director of my own Ltd Co. in UK, it took me a while to get my head around it.