Tax on Employment benefit

MarcMCFC1986

Hello

I joined a new company in June 2022, and signed up to their BUPA Medical and Dental Plan which is a benefit of working there. However, I noticed that it actually means I'm paying about £40 a month extra in Tax. Just wondering if this is something that I will be able to claim back - otherwise, it isn't really free!?

Also, I know I overpaid tax last year, and when I sign into my gov.uk personal tax account it says I don't need to do anything and HMRC will be in touch with me between June - October. Just wondering whether it is generally nearer to June or October that people hear from them? I kinda need the money back!

Thanks

Marc

Dazed_and_C0nfused

MarcMCFC1986 said:

Hello

I joined a new company in June 2022, and signed up to their BUPA Medical and Dental Plan which is a benefit of working there. However, I noticed that it actually means I'm paying about £40 a month extra in Tax. Just wondering if this is something that I will be able to claim back - otherwise, it isn't really free!?

Also, I know I overpaid tax last year, and when I sign into my gov.uk personal tax account it says I don't need to do anything and HMRC will be in touch with me between June - October. Just wondering whether it is generally nearer to June or October that people hear from them? I kinda need the money back!

Thanks

Marc

Only you know if the medical benefit is worth that to you.

You won't be able to claim anything back, it's a taxable benefit so the value forms part of your taxable income just like taxable earnings, interest, etc etc.

I suspect it's anytime between June and October but maybe refunds are at the front of the queue to save people chasing HMRC for an update?

purdyoaten2

MarcMCFC1986 said:

Hello

I joined a new company in June 2022, and signed up to their BUPA Medical and Dental Plan which is a benefit of working there. However, I noticed that it actually means I'm paying about £40 a month extra in Tax. Just wondering if this is something that I will be able to claim back - otherwise, it isn't really free!?

Also, I know I overpaid tax last year, and when I sign into my gov.uk personal tax account it says I don't need to do anything and HMRC will be in touch with me between June - October. Just wondering whether it is generally nearer to June or October that people hear from them? I kinda need the money back!

Thanks

Marc

Would you rather pay tax on the value of the benefit or not receive the benefit? Your choice. 

MarcMCFC1986

Well - I haven't used it yet, and since I already pay for the NHS I'm quite happy to stick with using that, tbh. 

I only signed up for BUPA as I thought it would be free - not £40 a month.

I don't really understand how tax works when it comes to benefits etc, so had no idea it would actually cost me anything. 

molerat

You are paying £40 for something that would otherwise cost you £100 (and that would be at bulk discount rate)

MarcMCFC1986

molerat said:

You are paying £40 for something that would otherwise cost you £100 (and that would be at bulk discount rate)

Yeah I get that - but as Sir Martin Lewis would say...if it's not something you would buy anyway then it isn't a saving.

Private Health & Dental Insurance is nice - for free - but I wouldn't pay £40 a month for it under normal circumstances. I only signed up because I thought there would be no cost for me. 

DullGreyGuy

Your employer doesnt charge you for it but HMRC is wise to the fact that your employer could give you a free house, a free car, free supermarket vouchers etc etc and then a tiny salary so they pay little Employers NI and you pay little income tax/NI.

To avoid employers hiding income in benefits instead HMRC add the value of the freebie to your salary and tax you on the BIK. So if you are a higher rate tax payer (40%) and getting a benefit worth £1,000 a month then you will pay £400 in tax each month.

You're free to opt out, which saves your employer even more monies, to avoid the tax but then obv nothing back in return.

For a fair while "flexible benefits" were all the rage where you decided if you wanted PMI or cashplans etc else got the money as salary. You'd still pay the tax on it but at least the remainder goes into your bank account at the end (a little under £600 for a £1,000 a month benefit package not taken for a higher rate tax payer)

sheramber

MarcMCFC1986 said:

molerat said:

You are paying £40 for something that would otherwise cost you £100 (and that would be at bulk discount rate)

Yeah I get that - but as Sir Martin Lewis would say...if it's not something you would buy anyway then it isn't a saving.

Private Health & Dental Insurance is nice - for free - but I wouldn't pay £40 a month for it under normal circumstances. I only signed up because I thought there would be no cost for me. 

Did you ask if it would cost you anything?

purdyoaten2

sheramber said:

MarcMCFC1986 said:

molerat said:

You are paying £40 for something that would otherwise cost you £100 (and that would be at bulk discount rate)

Yeah I get that - but as Sir Martin Lewis would say...if it's not something you would buy anyway then it isn't a saving.

Private Health & Dental Insurance is nice - for free - but I wouldn't pay £40 a month for it under normal circumstances. I only signed up because I thought there would be no cost for me. 

Did you ask if it would cost you anything?

Just noticed that dental insurance was included also! £40 per month is a no brainer for me - most phone contracts cost more!

MarcMCFC1986

sheramber said:

MarcMCFC1986 said:

molerat said:

You are paying £40 for something that would otherwise cost you £100 (and that would be at bulk discount rate)

Yeah I get that - but as Sir Martin Lewis would say...if it's not something you would buy anyway then it isn't a saving.

Private Health & Dental Insurance is nice - for free - but I wouldn't pay £40 a month for it under normal circumstances. I only signed up because I thought there would be no cost for me. 

Did you ask if it would cost you anything?

No - it said Free Health & Dental Insurance with BUPA so didnt think I'd need to ask if it would cost me anything... 

MarcMCFC1986

DullGreyGuy said:

Your employer doesnt charge you for it but HMRC is wise to the fact that your employer could give you a free house, a free car, free supermarket vouchers etc etc and then a tiny salary so they pay little Employers NI and you pay little income tax/NI.

To avoid employers hiding income in benefits instead HMRC add the value of the freebie to your salary and tax you on the BIK. So if you are a higher rate tax payer (40%) and getting a benefit worth £1,000 a month then you will pay £400 in tax each month.

You're free to opt out, which saves your employer even more monies, to avoid the tax but then obv nothing back in return.

For a fair while "flexible benefits" were all the rage where you decided if you wanted PMI or cashplans etc else got the money as salary. You'd still pay the tax on it but at least the remainder goes into your bank account at the end (a little under £600 for a £1,000 a month benefit package not taken for a higher rate tax payer)

This is really helpful - thanks!