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Where Taxpayers and Advisers Meet

Private health insurance as benefit in kind

adnauseum
Posts:14
Joined:Sun Jan 28, 2024 2:54 pm
Private health insurance as benefit in kind

Postby adnauseum » Fri Mar 22, 2024 3:25 pm

Wondering about the tax implications of committing to workplace private health insurance.

Salary: 57,500
Monthly cost of family cover: £154.25. Employer pays £61.70 of this.

Therefore is it true to say that, for income tax purposes, my income is salary + total annual cost of insurance = £59,351?


Therefore I am paying 40% tax on the £1,851 annual cost of insurance = £740.40 extra paid in tax?

Presumably the amount my employer pays towards it makes zero difference to this calculation?

Thanks in advance…
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Jholm
Posts:389
Joined:Mon Mar 11, 2019 4:22 pm

Re: Private health insurance as benefit in kind

Postby Jholm » Fri Mar 22, 2024 4:17 pm

Provision of cover (154.25 x 12) £1,851
Less: amount made good (92.55 x 12) (£1,110)
Cash equivalent of benefit £741

This amount is taxed as employment income. £741 @ 40% should cost you £296.40.

Your understanding is mostly correct but you need to account for only the amounts incurred by employer (eg. total cost, less amounts you pay)

adnauseum
Posts:14
Joined:Sun Jan 28, 2024 2:54 pm

Re: Private health insurance as benefit in kind

Postby adnauseum » Mon Mar 25, 2024 2:44 pm

Provision of cover (154.25 x 12) £1,851
Less: amount made good (92.55 x 12) (£1,110)
Cash equivalent of benefit £741

This amount is taxed as employment income. £741 @ 40% should cost you £296.40.

Your understanding is mostly correct but you need to account for only the amounts incurred by employer (eg. total cost, less amounts you pay)
Thank you for explaining quickly and clearly! Much appreciated.


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