P11Ds, HEALTH INSURANCE, AND THE TAXMAN
The information below is our understanding on the current tax situation however please note that we are not tax advisors.
We recommend consulting registered accountants or HMRC for further information.
P11Ds, health insurance, and the taxman.
From a company point of view;
If you pay for medical or dental treatment or insurance for your employees in most cases the payments are not tax exempt and you must declare them to HMRC on your annual P11D statement of benefits.
This applies to premiums paid for company insurance policies and individual insurance policies.
When a company pays for a company paid medical insurance policy for its’ employees the company should not reclaim each employee’s premium via salary sacrifice.
In respect of company paid premiums for an employee’s partner or child dependants the amount paid could either be part of the employee’s P11D declaration or the amount paid could be recovered by post tax salary sacrifice from the employee’s salary.
At each policy renewal, or after you add or remove people to your membership, we will always send you a statement showing the levels of benefit for each person’s P11D form, if you need a copy please email us; firstname.lastname@example.org
From an employee’s point of view;
When your employer pays for you to have medical insurance they will declare the cost of your premium to HMRC on a P11D form, which is a statement of your un-taxed benefits. HMRC collect the tax due by amending your tax code from the start of the next tax year (6th of April), this will reduce the amount of your untaxed earnings, hence reducing your take home pay.
Nobody enjoys having to pay tax on this benefit but the advantage of having medical insurance via your employer is that the cost should be significantly less than if you organised your own policy and paid for it out of your taxed income. Hence employer paid health insurance should be viewed as an attractive addition to your remuneration package.
Premiums and illustrative tax charges
|Level of cover||Annual premium paid by company||Annual tax Charge (20% tax payer)||Annual tax Charge (40% tax payer)||Annual tax Charge (45% tax payer)|
|Single parent family||£1,600||£350||£640||£720|