Your Personal Financial Questions – Do I have to pay tax on holiday discounts that I receive as part of my job?

A Workplace benefits are known as benefits in kind (BIK) and since these benefits have a monetary value they must normally be treated as taxable income.

However, there are some work perks that aren’t taxable, and that’s likely the case in this case, according to Marian Ryan, Consumer Tax Manager at Taxback.com.

As long as two conditions are met, you should not have to pay tax on your discounted holiday.

The first condition is that the leave should cost you more or the same amount as it costs your employer to give it to you. Since the discounts are usually around 10 pieces, this condition is probably met.

The second condition is that discounted goods or services purchased by the staff cannot be easily exchanged for cash, so you as the staff cannot easily sell the item. As this is a discounted holiday which would be in your name, Ms Ryan said that condition should also be met.

If these two conditions are not met, your reduced holiday could be considered a taxable benefit. If this is the case, income tax, PRSI, and USC would need to be paid on the difference between the price you paid for it and the cost your employer incurs to provide it.

​

Q I am retiring next year and need to decide whether to receive an annuity or an Approved Retirement Fund (ARF). I have a defined contribution pension. Given rising interest rates, would an annuity be a better option?

​

A An annuity is an annual annuity that you can buy with the money in your annuity pot when you retire. It gives you a guaranteed income for the rest of your life.

When interest rates are low, as they have been in recent years, it’s usually expensive to buy pensions, says Mark Reilly, who leads pension deals with Royal London Ireland.

As interest rates rise, pension rates are likely to rise too, meaning that you should now be able to buy yourself a better annuity with an annuity than you said you would at the beginning of the year before interest rates started to rise, hey said.

So in an environment of rising interest rates, annuities could be a more viable option than in the past.

However, pension rates do not rise directly in line with interest rates, so further interest rate hikes in the coming years do not necessarily have to be followed by jumps in pension rates.

Don’t let interest rates sway you too much when deciding between an annuity and an approved retirement fund. You must first weigh the pros and cons of each option.

An ARF is a personal pension fund in which you can leave the money in your pension pot invested after retirement. You can withdraw money from your VRG on a regular basis to provide yourself with an income when you retire and you must do so in a way that does not deplete your fund.

A major advantage of an ARF is that the money remaining in it can be left to your next of kin after your death. This is not always the case with pensions.

​

Q My wife and I, both in our 70s, work at VHI Healthcare. Our plan is to renew Health Access on January 1st at an annual cost of €3,555 this year. I find comparisons very complicated. Can you help?

​

A According to TotalHealthCover.ie’s Dermot Goode, this is a semi-private hospital plan with a €125 deductible per claim that has been on the market for some time.

For those who want full coverage for major orthopedic and ophthalmic procedures in private hospitals, this is probably VHI’s most cost-effective option, he said.

If you’re open to switching without losing full coverage for these procedures, he recommends you consider Laya’s Simply Connect Plus, priced at €1,471 each.

This is a good semi-private business plan with a lower deductible structure and better high-tech heart coverage. It also includes a 50 percent refund for a range of outpatient expenses without first paying a deductible, Mr Goode said.

If you’re willing to co-pay for certain orthopedic and ophthalmic procedures in private hospitals, you might also consider the VHI PMI 3613 at €1,340 each, or Irish Life Health’s 4D Health 2 at €1,351 per adult.