Private medical insurance benefit and tax

jem16

My son has private medical insurance as a benefit from his company. I have been asking him if he was given a P11D but he has no idea what I'm talking about. His tax code is the normal 522L.

His payslip shows the medical insurance as a payment and then the same amount as a deduction. As the payment is added on the his monthly salary which is then taxed, does this mean that no further deduction is necessary by HMRC adjusting his tax code?

We're just trying to find out if he should be informing HMRC or not.

Murdina

If the actual amount of the medical insurance premium has suffered tax then he is fine. It is not a benefit as such i.e. he is effectively paying for it out of taxed income - but the firm may be able to get favourable group rates for employees which mean he is still better off than if he arranged insurance for himself.
Alternatively, they may be doing things incorrectly i.e. they are for some reason showing it as income and expense which cancel each other out. In that case, it remains a taxable benefit which should be returned on form P11D. He should ask his personnel/HR dept or manager if they can clarify the position in the first instance. If the firm has got it wrong, then this is not unique.

jem16

From what I can see it is being taxed.

£33.58 is added to his monthly pay before tax is taken. From my calculations he is paying £7.38 more in tax than he would be if that £33.58 was not there. In the decuctions column, he has tax, NI and then the £33.58 again.

So it looks as if the firm is doing this correctly - would you agree?

jennifernil

It's a strange way of doing it, but sounds like it gives the correct result.

Murdina

I think jennifernil is right. Why does he not ask the payroll dept what is going on?

jem16

I have asked him to check with HR or payroll.

However when he gets around to that might be a different matter.

CLAPTON

It seems an excellent arrangement to me.
If he leaves the company or the amount changes then it automatically works out correctly without the hassle of getting the HMRC to change his tax code.

tigtag02

jem

it sounds like he is just paying the tax on the benefit ~ this is what happens where I work but you dont see the addition/deduction on the actual payslip.

HTH
tigtag

jem16

Thanks everyone.

I agree that it is an unusual way of doing it - at least not a way that I've seen before. However he does seem to be paying the extra tax due so everything seems to be OK.

Just didn't want him to be landed with a big tax bill.