TAX on Medical Insurance - is this right?

wendb69

I've tried to research thus but to no avail.

My work offered me personal medical cover (2 years running now) . It costs the company around £2000 to £2200 a year.  I was told that I pay the tax on this.

Just got my tax code notice for this year and it says 

Personal allowance 12570
Less medical insurance 2152

Is that correct?  Shouldn't it just be the tax payable on the medical insurance?  Want to bring this up with my firm but need advice before I do please. 

Dazed_and_C0nfused

wendb69 said:

I've tried to research thus but to no avail.

My work offered me personal medical cover (2 years running now) . It costs the company around £2000 to £2200 a year.  I was told that I pay the tax on this.

Just got my tax code notice for this year and it says 

Personal allowance 12570
Less medical insurance 2152

Is that correct?  Shouldn't it just be the tax payable on the medical insurance?  Want to bring this up with my firm but need advice before I do please. 

How much extra tax will you now pay 🤔

sheramber

It will be the tax due on the medical insurance. 

Your tax code means you will pay tax due on £2152 at whatever rate of tax you pay. 

Mark_d

Looks fine to me

wendb69

Mark_d said:

Looks fine to me

So that's right ✅️ 

Grumpy_chap

wendb69 said:

My work offered me personal medical cover (2 years running now) . It costs the company around £2000 to £2200 a year.  I was told that I pay the tax on this.

Just got my tax code notice for this year and it says 

Personal allowance 12570
Less medical insurance 2152

Is that correct?  Shouldn't it just be the tax payable on the medical insurance?  Want to bring this up with my firm but need advice before I do please. 

It all seems correct.

You have a benefit worth between £2,000 and £2,200.

Your tax code shows you have a benefit worth £2,152 which is exactly what you understood to be the case.

You will pay tax on that £2,152.  It is not showing the value of the actual tax.
How much the tax is will depend on your marginal tax rate.

Bookworm105

wendb69 said:

Mark_d said:

Looks fine to me

So that's right ✅️ 

yes, a tax code shows the amount of money which is to be subject to tax
it does not show the amount of tax to be taken since people might be taxed at 20%, 40% or 45% 

DullGreyGuy

wendb69 said:

I've tried to research thus but to no avail.

My work offered me personal medical cover (2 years running now) . It costs the company around £2000 to £2200 a year.  I was told that I pay the tax on this.

Just got my tax code notice for this year and it says 

Personal allowance 12570
Less medical insurance 2152

Is that correct?  Shouldn't it just be the tax payable on the medical insurance?  Want to bring this up with my firm but need advice before I do please. 

Seems it costs them exactly £2,152 and so yes, by lowering your tax free allowance by £2,152 it will mean you will pay tax on the extra £2,152 of income to compensate for the benefit in kind. 

penners324

Have you asked why they're not Payrolling Benefits?

It becomes a legal requirement soon

Phoenix72

penners324 said:

Have you asked why they're not Payrolling Benefits?

It becomes a legal requirement soon

Depends on your definition of soon - 1st April 2026 it becomes mandatory

prowla

wendb69 said:

I've tried to research thus but to no avail.

My work offered me personal medical cover (2 years running now) . It costs the company around £2000 to £2200 a year.  I was told that I pay the tax on this.

Just got my tax code notice for this year and it says 

Personal allowance 12570
Less medical insurance 2152

Is that correct?  Shouldn't it just be the tax payable on the medical insurance?  Want to bring this up with my firm but need advice before I do please.

It's saying your tax-free allowance would be £12570.

Which means you only pay tax on what you earn over the £12570 threshold.

However, the medical insurance is a taxable benefit, so the threshold is reduced by £2152.

Which means your tax-free allowance is reduced to £10418.

Which means you start paying tax on earnings over £10418.

So yes, you only pay the tax on the £2152.

(ie. it's not £2k extra tax!)