How is benefits in kind tax allocated

iharding

I'm struggling to phrase this question in a clear way - I certainly failed in a call to HMRC the other day - but will do my best.

I received medical insurance from my previous employer, paid as a annual premium on 1st July each year. I changed jobs in May this year, to a company that provides no taxable benefits, which I informed HMRC about at the time.

My tax code still includes a deduction for the July 2013 medical insurance premium. I understand that although I left part way through a policy year I am liable to tax on the full annual premium - no arguments there.

I called HMRC to ask that they change my tax code to remove the deduction for medical insurance, only to be told that because the policy was in force on 6th April, I will continue to be liable to tax according to the tax code in force at the time for the rest of the 14/15 tax year. As there was no premium paid in this tax year, and I no longer receive any benefits from the policy, I find it hard to understand how I can still be liable to pay tax on it.

The only scenario that makes sense to me is if no tax for the July 2013 premium was deducted during the 13/14 tax year, so I have to pay it all this year. Is this the way it works? I always assumed that HMRC issued a new tax code with immediate effect when informed about a change in taxable benefits, and didn't wait until the following year to start collecting tax on them.

Sorry for the long post, I hope it makes sense.

Thanks
Ian

TheCyclingProgrammer

Firstly, if you are on the wrong tax code and it results in an overpayment of tax, you will be entitled to reclaim this.

This page says you should tell HMRC straight away when you stop receiving taxable benefits and they will change your tax code so unless there's something I'm missing it might be worth ringing them again:

http://www.hmrc.gov.uk/incometax/codes-company-benefits.htm

iharding

Maybe I overcomplicated things in my last call. I will follow your suggestion and try again, but just tell them I want to check they have acknowledged that I stopped receiving any taxable benefits from 2nd May. They can decide if that warrants a new tax code or not.

The figures on the 2013/14 P60 tally with having met the full liability for the medical insurance premium during that tax year, so I might have a £600 refund to look forward to next summer, but if not then at least I will have paid what I owe them and should be on a code with no deductions from April.

Thanks
Ian