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Where Taxpayers and Advisers Meet

BIK Health Insurance

boxrick
Posts:7
Joined:Sun Jan 31, 2016 12:03 am
BIK Health Insurance

Postby boxrick » Fri Feb 04, 2022 5:22 am

I have just started at a new employer who provides private medical insurance to all staff. This isn’t anything to do with my salary and the employer pays for it, or I simply don’t get it.

I don’t particularly want private insurance, but if it’s being given away I may aswell take it. However my belief is that it will cost me more in tax, than simply if I was to buy it privately.

The “cost” to my employer for the family plan is approx 2.5k per year. If I am to buy it myself for the “premium” option for me and my partner Its £960 per year.

I am in the “60%” bracket basically meaning any wage I receive is also reducing my personal allowance on top of the 40%.

Simply put, will I have to pay 40% and lose my personal allowance on that 2.5k figure if I take the company health insurance? Is there any sensible way to make this more tax efficient?

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: BIK Health Insurance

Postby darthblingbling » Fri Feb 04, 2022 6:01 am

Don't take it if you think it's costing you more than to buy it privately. Maybe ask your employer for evidence that it's costing them nearly 3 times more than what you can get it for.

Ultimately whatever the cost to the employer is will be the taxable benefit value to you, no real way around it.

boxrick
Posts:7
Joined:Sun Jan 31, 2016 12:03 am

Re: BIK Health Insurance

Postby boxrick » Mon Feb 07, 2022 3:23 am

So I assume this is a definite charge of the full rate of tax?

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: BIK Health Insurance

Postby darthblingbling » Mon Feb 07, 2022 7:02 am

Whatever the taxable value is will be taxed on you at your marginal rate of tax. I.e. the taxable value is treated as additional earnings subject to tax (but not class 1 NIC)

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: BIK Health Insurance

Postby robbob » Mon Feb 07, 2022 8:58 am

You can avoid the 60% tax charged presuming you can add suffcient to your pension - grossed up value of pension contribution to avoid all the tax charged on the benefit will cost you an extra 1k though after tax relief - which is pretty much the same outcome as paying the 960 from your pocket !!

For anyone whose adjusted income for 100k purposes ends up between 100k and 125k in ie 60% marginal rate its about as complete a no brainer as you can get adding any excess into pensioon tax wise unless you are maxed out so you dont pay the 60^ tax - not so easy for those who are above that 60% marginal rate.
Obviously that may involve some proper first world choices if one is stuggling to find the cash at that income level.


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