VHI and BIK

[lolkelly]

Hi,

I have a quick tax question that i hope someone can help me with. Basically i signed up for VHI through work. As part of my contract it stated that my company would pay my VHI for me.

I didnt do anything about VHI for the first 3.5 months of my job(I started in mid July). I then contacted HR and they said they would contact the VHI on my behalf. Everything was great and i got the necessary policy number and card.

Now to the trouble. I got my latest monthly paycheck at the start of this week and its down approx 100 on what it normally should be.

From looking at my paycheck i have a Benefit in Kind amount of 214 and my tax at a higher rate is 214 higher than the previous few months. I also paid a higher PRSI of about 15. Is tihis 214 taking in account VHI since i started in the post?

Anyway the overall effect of all this is that im down 100 than normal. I know this is something to do with the VHI but can i claim additonal tax credits here or anything?

Also will this be part of every monthly paycheck? I dont really get it because the Plan i get with VHI is only 45 a month.

Any replies would be great. Thanks

 

[ClubMan]

I know this is something to do with the VHI but can i claim additonal tax credits here or anything?

Your employer is charging you tax and PRSI on the BIK attributable to them paying your VHI premiums as they are legally obliged to do. You can also claim a tax credit in respect of the premiums which will mitigate your deductions a bit:

[broken link removed]

Also will this be part of every monthly paycheck? I dont really get it because the Plan i get with VHI is only 45 a month.

Maybe the BIK was backdated this month but you will pay BIK tax and PRSI as long as you are availing of the employer payment of VHI contributions. If your premium is €45 p.a. then you can generally expect to pay tax (20% or 41%), PRSI (4%) and health levy (2%) on that amount. If you claim the employee/personal tax credit in respect of these premiums then this will reduce your tax/PRSI liability a bit.

 

[lolkelly]

Your employer is charging you tax and PRSI on the BIK attributable to them paying your VHI premiums as they are legally obliged to do. You can also claim a tax credit in respect of the premiums which will mitigate your deductions a bit:

[broken link removed]
Maybe the BIK was backdated this month but you will pay BIK tax and PRSI as long as you are availing of the employer payment of VHI contributions. If your premium is €45 p.a. then you can generally expect to pay tax (20% or 41%), PRSI (4%) and health levy (2%) on that amount. If you claim the employee/personal tax credit in respect of these premiums then this will reduce your tax/PRSI liability a bit.

Great, Thanks for the explanation ClubMan. Thats really cleared things up!
I presume as you say that this month it was backdated and that next month ill be looking at a figure in the region of 40-50.

 

[ClubMan]

If you are confused about the payroll figures then ask your HR/payroll department/company accountant etc.