How to Fill in VHIS on Your Tax Return: A Step-by-Step Guide to Part 10A

The annual tax return filing season in Hong Kong presents a specific opportunity for residents to reduce their tax liability through the Voluntary Health Insurance Scheme (VHIS). For the 2024/25 tax year, the maximum deductible premium per insured person stands at HKD 8,000, a figure that has remained unchanged since the scheme’s inception in 2019. However, a critical change took effect on April 1, 2024: the Inland Revenue Ordinance (Cap. 112) was amended to allow deductions for premiums paid on policies taken out by the taxpayer for their specified relatives, even if those relatives are not ordinarily resident in Hong Kong. This legislative shift, codified in Section 26D of the Ordinance, expands the scope of the deduction significantly for the current filing season. For the estimated 1.38 million VHIS policyholders as of December 2023 (per the Health Bureau’s latest published figures), correctly completing Part 10A of the tax return is no longer a routine checkbox exercise but a nuanced claim requiring precise documentation of both the policy and the familial relationship.

The Legislative Basis for the VHIS Deduction

The VHIS tax deduction is not a discretionary allowance but a statutory right under Section 26D of the Inland Revenue Ordinance (Cap. 112). Understanding its precise legal framework is the first step to a successful claim.

Eligibility Criteria for the Taxpayer

The deduction is available to any individual who is a taxpayer under Hong Kong’s salaries tax regime. The taxpayer must be the policyholder of a certified VHIS policy. The premium must be paid by the taxpayer during the year of assessment, and the deduction is capped at HKD 8,000 per insured person per tax year. A key point often overlooked is that the deduction is for the premium paid, not the policy year. If a taxpayer pays a premium in April 2024 covering the period April 2024 to March 2025, that full amount is claimable in the 2024/25 tax return, provided it does not exceed the HKD 8,000 cap.

Who Can Be the Insured Person?

The taxpayer can claim a deduction for premiums paid for themselves and for any of their specified relatives. As of the 2023/24 tax year, this definition was expanded. The current list of specified relatives includes:

• The taxpayer’s spouse.
• The taxpayer’s or their spouse’s parent, grandparent, or child.
• The taxpayer’s or their spouse’s sibling.
• The taxpayer’s or their spouse’s uncle, aunt, nephew, or niece.

The critical update for the 2024/25 return is the removal of the requirement that the specified relative must be ordinarily resident in Hong Kong. This means a taxpayer can now claim a deduction for a VHIS premium paid for a parent living in Mainland China, Canada, or the United Kingdom, provided the policy is a certified VHIS plan.

A Step-by-Step Guide to Completing Part 10A

Part 10A of the Tax Return – Individuals (BIR60) is the dedicated section for claiming the VHIS deduction. The form requires the taxpayer to list each insured person and the corresponding premium paid. Precision here is paramount, as errors can lead to a rejection of the claim or a subsequent tax assessment.

Step 1: Gather Your VHIS Policy Documents

Before entering any data, the taxpayer must have the VHIS certificate for each policy. This certificate, issued by the insurer, contains the policy number and the certified product name. It is the primary evidence that the policy qualifies for the deduction. The Inland Revenue Department (IRD) can request these certificates during an audit. The taxpayer should also retain the premium payment receipt, which shows the date and amount paid.

Step 2: Identify the Insured Person and Their Relationship

In Part 10A, the taxpayer must specify the insured person’s name and their relationship to the taxpayer. The IRD uses a standard code system for this. For example, “S” for self, “SP” for spouse, “P” for parent, “C” for child. If claiming for a sibling, the code is “B” for brother or “S” for sister. The taxpayer must ensure the relationship code matches the definition of a specified relative under Section 26D. Claiming for a cousin, for example, is not permitted.

Step 3: Enter the Premium Amount Paid

The taxpayer must enter the exact amount of premium paid for that insured person during the year of assessment. This is the gross premium before any discounts or rebates. The IRD will automatically cap the deductible amount at HKD 8,000 per insured person. If a taxpayer paid HKD 10,000 for their own policy and HKD 6,000 for their spouse’s policy, they would enter HKD 10,000 and HKD 6,000 respectively. The IRD’s system will then apply the cap, resulting in a total deduction of HKD 14,000 (HKD 8,000 for self + HKD 6,000 for spouse).

Step 4: The Joint Policy Scenario

A common point of confusion arises with joint policies that cover both the taxpayer and a spouse. The IRD’s guidance is clear: the premium must be apportioned between the two insured persons. The taxpayer can only claim the deduction for the portion of the premium attributable to themselves and their specified relatives. If a joint policy costs HKD 15,000 and covers the taxpayer and their spouse, the taxpayer can only claim the portion they paid for themselves and their spouse. A reasonable apportionment, such as 50/50, is generally accepted, but the taxpayer should retain the insurer’s statement showing the premium allocation.

Common Pitfalls and How to Avoid Them

Even with the correct legislative understanding, taxpayers frequently make errors that delay processing or result in a disallowed claim.

The “Specified Relative” Trap

The most common pitfall is attempting to claim for a relative who does not meet the statutory definition. Before the 2024/25 amendment, claiming for a parent living overseas was a clear error. Now, the relationship itself is the gatekeeper. For example, a taxpayer cannot claim a deduction for a premium paid for their fiancé or a domestic helper. The relationship must be one of the specific blood or marital ties defined in the Ordinance. The IRD’s 2024/25 tax return guide explicitly lists these relationships, and the taxpayer should cross-reference their claim against this list.

The “Two Taxpayers, One Insured” Problem

A single insured person can only be the subject of one VHIS deduction claim per tax year. If both a husband and wife are taxpayers, they cannot both claim the deduction for the same premium paid for their child. The deduction belongs to the person who actually paid the premium. If they paid jointly, they must agree on who will claim the full amount. The IRD will reject a claim if it appears the same premium has been claimed by two different taxpayers.

Failing to Retain Proof of Payment

The IRD conducts random audits on tax returns. A taxpayer who claims the VHIS deduction must be able to produce the VHIS certificate and the payment receipt upon request. The statute of limitations for an IRD assessment is six years from the end of the year of assessment. Therefore, a taxpayer who claimed the deduction for the 2024/25 year must retain their documents until at least 2031. Losing these documents can result in the deduction being disallowed and a back-tax assessment being issued.

Strategic Considerations for Maximizing the Deduction

For the Hong Kong middle-class taxpayer, the VHIS deduction is a tool for both tax savings and healthcare planning.

The Family Pooling Strategy

The HKD 8,000 cap applies per insured person. A family of four—two parents and two children—can potentially claim a total deduction of HKD 32,000 per year. This is a straightforward way to reduce the family’s overall tax burden. The taxpayer should ensure that all family members are covered by a VHIS policy and that the premiums are paid by the highest-earning family member to maximize the marginal tax benefit. For a taxpayer in the 17% standard rate bracket, a HKD 32,000 deduction saves HKD 5,440 in tax.

Timing the Premium Payment

The deduction is based on the premium paid during the year of assessment. A taxpayer who wants to claim the deduction for the 2025/26 tax year must pay the premium between April 1, 2025, and March 31, 2026. Paying a premium on April 2, 2026, would move the claim to the 2026/27 tax year. This timing consideration is particularly important for taxpayers who have variable cash flow, such as self-employed professionals.

The VHIS as a Replacement for Standard Medical Insurance

Many Hong Kong employers provide group medical insurance. However, this insurance ceases upon leaving the employer. A VHIS policy, being an individual policy, offers portability. For a taxpayer who is considering a career change or retirement, paying for a VHIS policy now, while employed, allows them to build a claim history and lock in a premium rate based on their current age. The tax deduction is an immediate financial incentive to start this process.

Actionable Takeaways

• Verify that each policy for which you are claiming the deduction is a certified VHIS plan by checking the policy certificate or the Health Bureau’s online register.
• Ensure that the insured person for whom you are claiming is a specified relative as defined under Section 26D of the Inland Revenue Ordinance (Cap. 112), and that the relationship code entered in Part 10A is correct.
• Retain all VHIS policy certificates and premium payment receipts for at least seven years from the end of the year of assessment to satisfy a potential IRD audit.
• If you have a joint policy, apportion the premium between the insured persons and only claim the portion attributable to yourself and your specified relatives.
• Consider paying the annual premium in a lump sum at the start of the tax year to secure the deduction for that year and to simplify record-keeping.

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本文不構成稅務建議。涉及個人稅務情況請諮詢持牌會計師或稅務師。
This does not constitute tax advice. Consult a licensed CPA or tax advisor for your specific situation.