Tax credits and private medical insurance payments

Ktkt695

Hi

Desperately looking for help. I have been on sick for two years now and not receiving any sick pay from my employer.

I have a medical insurance policy with my pension that I pay for that pays me a monthly amount due to me not been able to return to work. This will pay this until I retire then pension will start. Does this class as income for tax credits?? I was told no when I first applied but now on my renewal they have included it.

Thanks

Icequeen99

These payments are often not included as income for tax credits.

See http://www.hmrc.gov.uk/manuals/tctmanual/tctm04612.htm

It depends on exactly the type of payment it is.

IQ

Icequeen99

Ktkt695 wrote: »

Hi

Desperately looking for help. I have been on sick for two years now and not receiving any sick pay from my employer.

I have a medical insurance policy with my pension that I pay for that pays me a monthly amount due to me not been able to return to work. This will pay this until I retire then pension will start. Does this class as income for tax credits?? I was told no when I first applied but now on my renewal they have included it.

Thanks

The other thing to add is that this year they are using the real time information feed from their tax system. The information they are displaying on renewal forms is not the same as income for tax credits purposes - it is just information sent to them for tax purposes.

People need to check really carefully, because it may be that some things listed should not be counted as income or it could be people can deduct certain amounts to lower their income for tax credits.

HMRC have done a really poor job of explaining this.

IQ

alexjonsson

Icequeen99 wrote: »

These payments are often not included as income for tax credits.

See http://www.hmrc.gov.uk/manuals/tctmanual/tctm04612.htm

It depends on exactly the type of payment it is.

IQ

Hi I am particularly interested in this thread as I am currently receiving income from a PHI plan.

I consider myself to have a reasonable grasp of the English language, but I'll admit most of the information on that link went straight over my head.

Are you saying that income from a PHI policy isn't taxable?

At present I have declared the income (£16,000 pa) to tax credits as taxable income.

Should I:

a) be contacting my employer to ask whether this income is taxable; and

b) be contacting tax credits to ask whether this income should infact or not go towards taxable income for tax credit purposes.

I do however think that on £16,000 pa I'd still get full CTC (married, one child), but if I can hope paying income tax that can only be a good thing.

Sorry to hijack this thread. Thanks in advance.

Icequeen99

I was giving that link as an example that things are not straightforward.

It really depends on the scheme and who is making the payments.

This might offer a better description on the tax side: http://www.hmrc.gov.uk/manuals/eimanual/eim06410.htm

and then this on permanent health insurance schemes:
http://www.hmrc.gov.uk/manuals/iptm/iptm6110.htm

In some cases the PHI schemes are not taxable and may not income for tax credits.

I would suggest you find out from HMRC on the tax side whether your particular payouts are taxable and then check the tax credits position.

IQ

alexjonsson

Hi, thanks for that information. I've had a look through, and it seems that because my PHI policy is a group policy for which the premiums are paid by my employer, and which is not classed as a benefit in kind for me, the payments are subject to tax and NI.

Fair enough. Once again, sorry for hijacking this thread. Although it was semi-related and I think this information will be useful for others in the future.

dave030445

alexjonsson wrote: »

Hi, thanks for that information. I've had a look through, and it seems that because my PHI policy is a group policy for which the premiums are paid by my employer, and which is not classed as a benefit in kind for me, the payments are subject to tax and NI.

Fair enough. Once again, sorry for hijacking this thread. Although it was semi-related and I think this information will be useful for others in the future.

The money you get from your PHI is not taken into account when sorting out ctc

alexjonsson

dave030445 wrote: »

The money you get from your PHI is not taken into account when sorting out ctc

Hi, have you got a reference for this? Cheers.

dave030445

alexjonsson wrote: »

Hi, have you got a reference for this? Cheers.

no sorry nothing in writing.

Icequeen99

dave030445 wrote: »

The money you get from your PHI is not taken into account when sorting out ctc

Not necessarily, it depends on the type of PHI, if it is taxable it may still be income for tax credits.

IQ

dave030445

Icequeen99 wrote: »

Not necessarily, it depends on the type of PHI, if it is taxable it may still be income for tax credits.

IQ

it doesn't seem to matter if its taxable or not