Private health ins/Benefit in kind - Help!

buel

Hi all.
My wife has been offered private health insurance by her employer (with the option of adding me for about £24 per month). However, we are both confused by the 'benefit in kind'/paying tax on this. I have tried Googling it but I'm still failing to grasp how or why she will be taxed on this (I'm not complaining and neither is she but we would both like to understand this), or if private health insurance really is worth it?
Please could someone offer to help?

Darksparkle

How much would it be? You say adding you would be £24 per month but how much for her?

Is she a basic rate or higher rate taxpayer?

xylophone

See http://taxaid.org.uk/guides/information/issues-for-employees/employee/benefits-in-kind

Your wife should find out from her employer if "payrolling" is being used.

buel10

Hi and thank you for the replies.
My wife is a basic rate taxpayer.
Regarding costs, this edited scan of one of the pages she received may help:

Darksparkle

Sorry my eye sight isn't good enough to read that on my phone.

If she's basic rate then she'll basically pay 20% on the value of the benefit.

So if it costs the employer £2000, it will cost her £400. Whether that's worth it will depend on how she uses it.

buel10

Darksparkle wrote: »

Sorry my eye sight isn't good enough to read that on my phone.

If she's basic rate then she'll basically pay 20% on the value of the benefit.

So if it costs the employer £2000, it will cost her £400. Whether that's worth it will depend on how she uses it.

Ahhhhh.....now I've got it...finally! Phew!! Thank you for that, this is why forums are so good - explaining things in layperson terms to....well, laypeople!:)

So.....next on the list is 'Payrolling'....anyone want to help with that one?

NYM

Very simply, it's when a Company employs another to deal with the payroll.

xylophone

So.....next on the list is 'Payrolling'....anyone want to help with that one?

It is explained in the link in my post above.

"Tax is due on company cars, medical insurance, free or reduced interest loans and other perks provided because of employment. This tax is usually collected via PAYE. Unless the benefit is payrolled, the code number of the PAYE tax code is reduced to reflect the benefits. This means that more tax is deducted from the employee’s pay each pay day. At the end of the tax year, the employer should give the employee a summary of the taxable benefits provided on a form P11D. Where a benefit in kind has been payrolled, you will not normally receive a P11D.

Some employers now tax benefits in kind through the payroll – called ‘payrolling’ the benefits. To do this, the employer includes the cash equivalent of the benefit in the employee’s pay on a month by month or week by week basis. This can have implications for both Universal Credit (where payrolled benefits are included as income, but ones reported only on form P11D may not be included as income) and tax codes (as payrolling benefits is an alternative to adjusting the benefit in a tax code)."


Your wife should check with her company whether the benefit is "payrolled" as above or whether her tax code will be adjusted to take account of the benefit.