Vhi and BIK - saving bik by joining spouses policy?

S

saml

Guest
My husband and I have vhi through our respective employers.
So we both pay BIK and are taxed individually at the moment.
I'm wondering if I joined his policy for example, if I would avoid or pay less BIK?
thanks in advance
 
Most companies only pay Medical Insurance for their own employees, and spouses, children etc have to be paid personally by the individual.

Also, if the company did pay the full Medical insurance it would still be a BIK, so I can't see an advantage in this.
 
sorry for jumping in on this, but I am currently filling in my online ROS and in the PERSONAL TAX CREDITS section there is one called Medical Insurance.

If I fill in the amount that my employer paid for me to the VHI for 2007, I get a 20% credit value against my tax called Medical Insurance Relief. There is no mention of BIK anywhere.

I don't understand why I personally would get a credit for something my employer is paying on my behalf.

Can anyone explain what is going on here?
 
tosullivan said:
sorry for jumping in on this, but I am currently filling in my online ROS and in the PERSONAL TAX CREDITS section there is one called Medical Insurance.

If I fill in the amount that my employer paid for me to the VHI for 2007, I get a 20% credit value against my tax called Medical Insurance Relief. There is no mention of BIK anywhere.

I don't understand why I personally would get a credit for something my employer is paying on my behalf.

Can anyone explain what is going on here?
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Tax relief is allowable at 20% for medical insurance contributions. This is deducted at source if you pay directly on your own behalf to VHI, i.e. VHI only bill you for 80%.

If your employer pays on your behalf, they pay 100% of the VHI bill on your behalf and so you are entitled to claim it separately.

This is quite a separate issue to the BIK payable on the amount that your employer pays to VHI, this should be included in your payslip as if it was extra salary and tax deducted in the normal way.
 
Your company is paying this for you, and this is taxed as a benefit in kind through your payroll at your marginal rate of tax.

If you paid it yourself, you would pay the premiums net of tax relief. However, companies paying medical insurance for employees do not get this tax relief at source - they pay the full gross.

As you are paying tax on the BIK, you are therefore entitled to claim the tax relief on the premiums paid.
 
Company is paying but its not showing on my payslip. They pay the amount to the VHI and thats as much as I see of it.
 
tosullivan said:
Company is paying but its not showing on my payslip. They pay the amount to the VHI and thats as much as I see of it.
Click to expand...

Ok, then you'll need to declare the full VHI amount as BIK on your Form 11 or 12 and pay tax on this. At least the relief will balance things a little!
 
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