Revenue Note for Guidance

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Revenue Note for Guidance

125 Tax treatment of benefits received under permanent health benefit schemes

Summary

A charge to tax under Schedule E is imposed on payments made to an individual under a permanent health benefit scheme approved by the Revenue Commissioners.

Details

(1) “benefit” is a payment to a person under a permanent health benefit scheme in the event of loss or diminution of income due to ill health.

“permanent health benefit scheme” is any scheme, policy, contract or other arrangement approved by the Revenue Commissioners which provides for periodic payments to an individual in the event of loss or diminution of income due to ill health.

(2) A policy of permanent health insurance, sickness insurance or other similar insurance is a permanent health benefit scheme if it conforms either with a standard form of policy approved by the Revenue Commissioners or a form which varies from such a standard form where the variations are approved by the Revenue Commissioners and any conditions subject to which the variations are approved are met.

(3) Any benefits received by a person under a permanent health benefit scheme are treated as profits or gains arising from an employment and, accordingly, are chargeable to tax under Schedule E. The tax chargeable is computed in accordance with the Schedule E basis of assessment (see section 112(1)), and the benefits are treated as emoluments to which PAYE applies (see Chapter 4 of Part 42).

(4) The Revenue Commissioners may nominate any of their officers to perform and discharge any functions authorised by this section.

Relevant Date: Finance Act 2020