Permanent Health Benefit contributions
You might take part in a scheme to have your income continue if you are absent due to illness or injury. The schemes, also known as income continuance plans, can be:
- group schemes or individual policies, and will have a Revenue registered number
- approved or unapproved by Revenue as Permanent Health Benefit Schemes.
If you take part in such a scheme you may claim tax relief under certain conditions.
To qualify for tax relief, the scheme you take part in must be Revenue approved.
You will receive tax relief based on the premiums that you paid in the year that you are claiming for. The relief is allowed by either:
The relief you receive is limited to 10% of your total income for the tax year. Payments to these schemes do not qualify for Pay Related Social Insurance (PRSI) or Universal Social Charge (USC) relief.
Your employer may contribute to an approved scheme on your behalf. You must pay USC on these contributions.
PAYE and PRSI does not apply where the combined contribution (employee and employer) does not exceed 10% of the employee's income. Any excess over 10% should be put through the payroll and PAYE and PRSI paid on that amount.
Where the premiums are for an unapproved policy or scheme, the premiums paid by the employer are taxable as Benefit in Kind (BIK).
How to claim
You can claim the relief during the year by following these steps:
- Sign into myAccount.
- Click on the ‘Manage your tax’ link in PAYE Services.
- Select 'Claim tax credits'.
- Select ‘Health’ and ‘Income Continuance’.
To claim the relief for a prior year, follow these steps:
For 2020 and subsequent years:
- Sign in to myAccount.
- Click on the 'Review your Tax 2020-2023' link in PAYE Services.
- Request Statement of Liability.
- Click on 'Complete Income Tax Return'.
- In the 'Tax credits & Reliefs' page select 'Health' and 'Income Continuance'.
- Complete and submit the form.
Payments received from Permanent Health Insurance (PHI) schemes
You must pay PAYE and USC on payments that you receive from PHI schemes. The administrator of the scheme will make all necessary deductions.
If you are self-employed, you can choose to have the benefits treated as part of your trading income. You must notify Revenue, within six months of taking out the policy, by completing Form PH (5).
You do not pay tax on payments unless they have continued for at least 12 months prior to the tax year. You must pay PAYE and USC on payments exceeding 12 months. In this situation, you are responsible for paying the tax to Revenue.