private medical insurance tax implications

sultan123

Work are providing private medical insurance but said they would add it to my wage each month. So roughly around £120 a month.

This will obviously get taxed. I am on a salary of 90k (+12k bonus). How much extra tax will this cost me if I go ahead with it?

Dazed_and_C0nfused

From what you've posted it's likely to be 60%.

40% tax plus loss of additional Personal takes it to 60%.

Annual benefit of £1,440 will mean you lose £720 of Personal Allowance.

MeteredOut

What do you mean "add it to your wage"? Are you sure its not a benefit in kind that will appear on your end of year P60? Or are they giving you the £120/month on your payslip but then subtracting it to pay the medical insurance premium?

Have you asked whether the insurance can be provided via salary sacrafice.

Thinking wider, if this will push you (further) into the £100K+ tax bracket, you might want to consider whether you can contribute more to a pension to bring you below that threshold as the 60% effective rate means its costing you a lot more than the headline £120.

sultan123

Dazed_and_C0nfused said:

From what you've posted it's likely to be 60%.

40% tax plus loss of additional Personal takes it to 60%.

Annual benefit of £1,440 will mean you lose £720 of Personal Allowance.

Thanks forgot to mention I do 5% salary sacrifice so could PA be saved?

sultan123

MeteredOut said:

What do you mean "add it to your wage"? Are you sure its not a benefit in kind that will appear on your end of year P60? Or are they giving you the £120/month on your payslip but then subtracting it to pay the medical insurance premium?

Have you asked whether the insurance can be provided via salary sacrafice.

Thinking wider, if this will push you (further) into the £100K+ tax bracket, you might want to consider whether you can contribute more to a pension to bring you below that threshold as the 60% effective rate means its costing you a lot more than the headline £120.

On my payslip it will be added as medical benefit

Dazed_and_C0nfused

sultan123 said:

Dazed_and_C0nfused said:

From what you've posted it's likely to be 60%.

40% tax plus loss of additional Personal takes it to 60%.

Annual benefit of £1,440 will mean you lose £720 of Personal Allowance.

Thanks forgot to mention I do 5% salary sacrifice so could PA be saved?

Yes, to be honest 5% is quite small and you could no doubt avoid loss of Personal Allowance and reduce plenty of 40% tax as well by increasing the sacrifice.

Albermarle

sultan123 said:

Dazed_and_C0nfused said:

From what you've posted it's likely to be 60%.

40% tax plus loss of additional Personal takes it to 60%.

Annual benefit of £1,440 will mean you lose £720 of Personal Allowance.

Thanks forgot to mention I do 5% salary sacrifice so could PA be saved?

On this specific point 5% is the legal minimum, but in reality inadequate, unless the employer is super generous with their contributions.
One issue with being a high earner is that to maintain anything like the same lifestyle in retirement, you need to be squirrelling away large amounts of money for decades. Doing this via a pension is by far the most tax friendly way, especially for higher rate taxpayers.

sultan123

Dazed_and_C0nfused said:

sultan123 said:

Dazed_and_C0nfused said:

From what you've posted it's likely to be 60%.

40% tax plus loss of additional Personal takes it to 60%.

Annual benefit of £1,440 will mean you lose £720 of Personal Allowance.

Thanks forgot to mention I do 5% salary sacrifice so could PA be saved?

Yes, to be honest 5% is quite small and you could no doubt avoid loss of Personal Allowance and reduce plenty of 40% tax as well by increasing the sacrifice.

But with 5% I am still protecting mg personal allowancw even if I am taking out private medical insurance?

sultan123

Dazed_and_C0nfused said:

From what you've posted it's likely to be 60%.

40% tax plus loss of additional Personal takes it to 60%.

Annual benefit of £1,440 will mean you lose £720 of Personal Allowance.

 please can I ask how you calculated £720

Dazed_and_C0nfused

sultan123 said:

Dazed_and_C0nfused said:

From what you've posted it's likely to be 60%.

40% tax plus loss of additional Personal takes it to 60%.

Annual benefit of £1,440 will mean you lose £720 of Personal Allowance.

 please can I ask how you calculated £720

When your adjusted net income is in the band £100,002 to £125,140 you lose £1 of Personal Allowance for every £2 your ANI exceeds £100,000.

So with ANI of £100,002 you lose £1 of Personal Allowance.

ANI of £103,000 you lose £1,500 of Personal Allowance.