Taxation on PHI

arethusa82

Any tax experts out there let me know whether or not Permament Health Insurance is taxable when paying out? My wife receives around £700 per month, but her employer is deducting tax and national insurance.

Thanks

stanmoresaver

arethusa82 wrote:

Any tax experts out there let me know whether or not Permament Health Insurance is taxable when paying out? My wife receives around £700 per month, but her employer is deducting tax and national insurance.

Thanks

Not a "tax expert" so seek clarification from one, but my understanding is that if the PHI plan was employer funded, then the benefits have to be paid directly to the employer and then would be passed on as earned income. The only exception to this is a private plan funded by the policyholder, where the benefits are tax-free but subject to lower benefit levels.

Trust this helps.

:beer:

arethusa82

Thanks for that advice. The contract is between the employer and the insurance provider. However, my wife paid for the policy via deductions from her pay. Nothing is ever simple :-)

payless

If paid from salary- I assume it was deducted at source, and therefore benefited from a reduction in tax
for example if premium was £30, it resulted in say £21 less in net pay ( so excat - just example)
-
so if premium paid net of tax, then suppose payout is also liable for tax