The tax-saving trio: TVC, deferred annuity and VHIS compared
The 'tax-saving trio' usually means three tools that are deductible under salaries tax and help retirement preparation: tax-deductible voluntary contributions (TVC), qualifying deferred annuities (QDAP) and VHIS. Used well, they ease your tax while building retirement savings and healthcare cover.
What are they, and the deduction caps?
TVC and QDAP share an annual deduction cap of up to HK$60,000 — the contributions and premiums for the two are combined against one allowance, not counted separately; VHIS is separate at up to HK$8,000 per insured person per year. They are different deductions and can be used together. TVC contributions go into your MPF account; QDAP is an insurance-authority-certified deferred annuity that turns into regular income after retirement; VHIS is government-certified inpatient cover, explained further under VHIS and in our VHIS tax deduction article. The deduction reduces your assessable income by the amount you actually paid, within the cap — it is not a direct cash rebate.
| Tool | Role | Annual cap |
|---|---|---|
| TVC | Retirement saving in an MPF account | Shares HK$60,000 with QDAP |
| QDAP (deferred annuity) | Regular income after retirement | Shares HK$60,000 with TVC |
| VHIS | Inpatient medical cover | HK$8,000 per insured person |
Caps and eligibility follow the latest Inland Revenue Department announcements.
What each does
- TVC: extra saving beyond mandatory MPF contributions, using the same fund choices; generally locked until 65, so it is a long-term retirement reserve.
- QDAP: a qualifying deferred annuity — after paying premiums for some years it converts into regular income at retirement, emphasising 'income for life'; for its non-guaranteed element see non-guaranteed parts of participating policies.
- VHIS: government-certified cover that reimburses inpatient costs, and you can insure a spouse, parents or children and claim a deduction on their premiums — bridging the gap between public-hospital waits and private-hospital fees.
Terms, lock-in periods and investment risk differ; combine by your goals and cash flow, and amounts follow the latest IRD announcements.
How to claim the trio at tax time
- Gather annual payment recordsAsk your MPF trustee, annuity insurer and VHIS insurer for the year's TVC contributions, QDAP premiums and VHIS premiums, and confirm the products qualify.
- Enter each deduction separatelyOn the tax return, fill in the deductible TVC and QDAP amounts (together no more than HK$60,000) and each insured person's VHIS premium (no more than HK$8,000 per person).
- Keep documents for reviewYou need not submit the proofs with the return, but keep them for a period in case the IRD reviews your claim.
- Review your overall retirement planUse tax time to review any retirement gap: estimate what you need with the retirement calculator first, then decide how to split the trio within the caps.
This outlines a general filing flow; the exact method and documents follow the latest IRD announcements.
How to use the trio well
- Match needs: TVC for saving, annuities (QDAP) for income, VHIS for medical cover.
- Mind the caps: TVC and QDAP share HK$60,000; VHIS is separate at HK$8,000/insured — once an allowance is used up, extra payments no longer add a deduction.
- Start early: annuities and medical cover are generally more favourable on premium and underwriting the earlier you take them.
- Don't deduct for deduction's sake: confirm the product fits your retirement needs and budget first — the tax is a bonus, not the only reason.
General education only, not personalised tax or financial advice; amounts and eligibility follow the latest IRD announcements. For a review of your own situation, see how we help.
Sources
The official information cited above can be verified at the sources below; the latest official publication always prevails.
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Frequently asked questions
What are the 'tax-saving trio'?
Usually tax-deductible voluntary contributions (TVC), qualifying deferred annuities (QDAP) and VHIS — all deductible under salaries tax and helpful for retirement preparation.
How much can the trio deduct per year?
TVC and QDAP share an annual cap of up to HK$60,000; VHIS is separate at up to HK$8,000 per insured person per year. Based on amounts paid and subject to the latest IRD announcements.
Are the TVC and QDAP caps separate?
No. TVC and QDAP share the same annual HK$60,000 cap; VHIS is a separate deduction. If you hold both TVC and an annuity, their contributions and premiums are combined.
Is the deduction cap the same as the tax I save?
No. The cap is the amount you can deduct from assessable income — for example up to HK$60,000 combined for TVC and QDAP. How much tax you actually save depends on your marginal rate; it is not a direct refund of that amount, and actual figures follow the latest IRD announcements.
Can I claim a deduction on my family's VHIS premiums?
Yes. VHIS allows a deduction on premiums for specified relatives such as a spouse, parents or children, capped at HK$8,000 per insured person per year; see our VHIS tax deduction article, and follow the latest IRD announcements.
Should I buy all three?
It depends on your needs and budget. Combine by goal — TVC for saving, QDAP for income, VHIS for medical cover; confirm the product fits your retirement needs first, as the tax is a bonus, not the only reason.
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