TAX on Medical Insurance - is this right?

sheramber

penners324 said:

Have you asked why they're not Payrolling Benefits?

It becomes a legal requirement soon

Maybe because it is not compulsory at present

MetaPhysical

That is correct.  You pay tax at your marginal rate on private medical insurance.  This means this "free" benefit is quite costly in terms of the tax you have to pay on it. My "free" healthcare costs me about £100 per month in tax as a 40% tax payer.

DullGreyGuy

MetaPhysical said:

That is correct.  You pay tax at your marginal rate on private medical insurance.  This means this "free" benefit is quite costly in terms of the tax you have to pay on it. My "free" healthcare costs me about £100 per month in tax as a 40% tax payer.

Was in two minds but...

Depends what you mean by "costly"... in absolute terms it can be a notable sum of money but costly is also a synonym of expensive and certainly for me company PMI has always been very cheap in comparison to personal PMI. At my last employer you paid the marginal rate on circa £1,200 (which was exceptionally good value) irrespective of your age or personal claims so £40 a month whereas my personal lines identical policy was circa £180 a month when I left employment and now is £350/month after a few years of aging and a few claims. 

MetaPhysical

DullGreyGuy said:

MetaPhysical said:

That is correct.  You pay tax at your marginal rate on private medical insurance.  This means this "free" benefit is quite costly in terms of the tax you have to pay on it. My "free" healthcare costs me about £100 per month in tax as a 40% tax payer.

Was in two minds but...

Depends what you mean by "costly"... in absolute terms it can be a notable sum of money but costly is also a synonym of expensive and certainly for me company PMI has always been very cheap in comparison to personal PMI. At my last employer you paid the marginal rate on circa £1,200 (which was exceptionally good value) irrespective of your age or personal claims so £40 a month whereas my personal lines identical policy was circa £180 a month when I left employment and now is £350/month after a few years of aging and a few claims. 

I agree.  I was making the point that PMI is not change-down-the-back-of-the-sofa money. 

sultan123

If you are earning 100k and take private medical insurance via employer which costs £2000 does that mean your overall income becomes 102k?

Dazed_and_C0nfused

sultan123 said:

If you are earning 100k and take private medical insurance via employer which costs £2000 does that mean your overall income becomes 102k?

Unless it was a payrolled benefit included in the £100k yes.