Private medical insurance and tax

sultan123

I have been told my company will pay for private medical insurance. They say annual premium is £1,200.

They also said I can have private dental insurance with premium being £500.

If my salary is 95k do I add on the extra £1700 in terms of tax? Guessing I pay 40% of £1700?

Bookworm225

correct
It is a benefit in kind, ie a personal expense paid by your employer and therefore you owe tax on the amount paid on your behalf by your employer.

TCTM04103 - Income: Employment income rules: Benefit in kind - HMRC internal manual - GOV.UK

kinger101

Go you have any other income which my put you in the 60 percent marginal rate?  E.g. bonus, share scheme, interest, dividends?

I'd check the private dental insurance for value.  Most policies I've seen have really low caps to the point where it's not even worth 40 pc of the premium.  

sultan123

 imagine you never used the medical insurance, is it in effect you still getting extra income in theory because some money is being added to your income?

Grumpy_chap

sultan123 said:

I have been told my company will pay for private medical insurance. They say annual premium is £1,200.

They also said I can have private dental insurance with premium being £500.

If my salary is 95k do I add on the extra £1700 in terms of tax? Guessing I pay 40% of £1700?

Yes, in simple terms, the BiK for medical / dental insurance is the money-value of the premium.

sultan123 said:

 imagine you never used the medical insurance, is it in effect you still getting extra income in theory because some money is being added to your income?

Yes, because you had the premium paid on your behalf of the insurer.

If you never need to use the policy, that is a good thing in the round (being healthy), but does mean that you paid some tax for something that you never got a return on.  The same as car insurance, home insurance, holiday insurance premiums are paid but the best outcome is nothing back.

Similarly, if you get ill and the policy pays outs £10k's, you don't pay tax on the pay-out, only the premium at the outset.


Be careful with the salary, which you state is £95k.  In your other recent thread, your salary was £103k and you were concerned to avoid the 60% effective rate (62% including NI) for crossing the £100k threshold and withdrawal of the personal allowance.  Any BiK (whether healthcare or otherwise) will simply increase your ANI.
https://forums.moneysavingexpert.com/discussion/6593296/how-to-get-round-60-tax-issue/p1