How does the tax payment on private health insurance work?

[houmie]

Hi,

I have recently switched to a perm position. As part of the package, there is a private health insurance included.

This is what I received today:

The company will pay for you and any dependants that you may wish to include on the plan but you will pay the tax on those premiums at your appropriate level. The monthly premium for you is approximately £90 per month and to include any dependants the costs are calculated as below...

I got in touch with the HR but they weren't clear on that either:

We have added the payments we make to BUPA on your behalf to you payslip as a benefit in kind. This means that you are taxed on the benefit on a monthly basis, avoiding a nasty tax bill at the end of the year.

Does it mean this tax benefit would reduce my annual free allowance? Since I have to do my self-assessment every year, wouldn't that mean I would have to pay more personal tax?


Many Thanks,
Houman

[northernladuk]

Why are you asking about perm benefits on a contractor forum?

[houmie]

Why are you asking about perm benefits on a contractor forum?

As I said, I used to be a contractor until recently. Its new to me. I thought maybe someone here has been in a similar situation and would be able to help me.

[malvolio]

It's earned income and so is treated as a BIK. Normally you will need to declare it on your annual SAR, and your employer will also report it via their corporate equivalent of a P11d but it seems they are taking the BIK taxation out monthly on your behalf, which seems fair. So yes, it has effectively reduced your tax free allowance, but since the tax is due, how it's collected really doesn't matter.

BTW don't ask Human Remains about taxation. They barely understand employment law most of the time.

[houmie]

It's earned income and so is treated as a BIK. Normally you will need to declare it on your annual SAR, and your employer will also report it via their corporate equivalent of a P11d but it seems they are taking the BIK taxation out monthly on your behalf, which seems fair. So yes, it has effectively reduced your tax free allowance, but since the tax is due, how it's collected really doesn't matter.

BTW don't ask Human Remains about taxation. They barely understand employment law most of the time.

haha funny about HR.

Many thanks for your kind help.