H&D BiK overcharging

[helpmeunderstand]

Hi folks,

Not great at working these things out, but looking for some potential clarification on this.

I joined my companies healthcare policy via Irish Life earlier this year after seeing it was a good deal. However, after going over my last few payslips every two weeks I have a H&D BiK of €114 (paid fortnightly). I rang the broker who handles it to say I wanted to cancel the policy, who reached out to Irish Life who confirmed my rate should only have been €50.60.

The breakdown is like this:

Health Insurance Premium: €1378.80

Company Pays: €1328.20

You Pay: €50.60.

I double checked my payslip, and double checked with colleagues who are all paying a BiK that comes out as nearly twice the policy price in tax annually. This fee only started appearing on my payslip after I joined the healthcare plan, and colleagues have confirmed the same thing for them.

A quick bit of pen and paper math worked out my annual H&D BiK at €2736.

Now that can't be right surely.

 

[pwh1969]

@helpmeunderstand If this is like how I pay BIK on my work van then you're reading the payslip wrong.

Bik of €114 over two weeks is the "value" that this work benefit is seen to afford you by revenue. You are then taxed more as if you had earned an extra €114 in your wages so what should actually be getting deducted it the tax due on €114 rather than the whole €114 itself.

This is how my BIK is worked out anyway.

 

[njehia]

@helpmeunderstand It looks like your payroll assumed you were being paid monthly and divided your premium by 12 rather than 24 (€1,378/12 = €114) when calculating the deemed gain to you from having the policy paid for by the company and not directly. So they need to correct this.

Btw I think the €50.60 mentioned by Irish life is a red herring - the tax will be company contribution * whatever your marginal tax rate is. It’s calculated as if you received that amount directly in your pay.

 

[lharabauer]

@helpmeunderstand You should talk to your Payroll department and ask for an explanation.

 

[helpmeunderstand]

@lharabauer Yeah I emailed them on Friday with the information but given the bank holiday I probably won't hear back from them until Wednesday and this is doing my head in.

At this point I'm really just curious about this.

 

[baboo]

@helpmeunderstand The amount of BIK on your payslip is not the value of tax you pay for that benefit, it’s the value of the benefit that’s then taxable at whatever rate you incur. That said, you can further offset this tax because you’re entitled to something like up to €200 in tax relief on any employer-paid portion of your health insurance premium, you just need to claim it back at the end of the tax year