Company Health-Care - Taxable Benefit?

8
Found 19th Aug 2011
Just joined a new company on Monday, and trying to unravel what their healthcare package actually means (I'm a little dyslexic with finances!).

There's a monthly charge (let's say £x) which gets taken off my total salary, but which is a "taxable benefit". Alternatively, I can opt out of the healthcare, but to do that there's a monthly charge the same as the healthcare option is each month (£x)...am I right in thinking that if I opt in my salary will be £(Salary - (£x+40%)), whereas if I opt out my salary will be £(Salary-£x)?

You can probably see why I'm financially dyslexic by the way my thought process works!
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Why pay to opt out? Might as well opt in! And it will be cheaper for you!
Hi
I think you may be getting a bit mixed up between 'salary sacrifice' & Taxable benefit. For example, I get private healthcare, with no deductions taken off my payslip. An amount is worked out by the Inland Revenue on an annual basis to how much they think this benfefit is worth in cash. This figure is the taxable benefit, e.g. Benefit = £300, you pay tax on that which if you are a 20% tax payer, then you would be £60 per year.

This is done by reducing your tax code, e.g. 747L, would be reduced to 717L.

From what you have put, it seems that you are talking about a salary sacrifice.
Original Poster
Thanks for the replies. Basically I get a base salary plus a benefits "lump" with which I can choose from a variety of options, or none at all and just take the cash. So I can opt to pay for medical out of this lump, or not, but if not then I still pay the same headline cost, just not the tax...I think...
i have had a similar thing

at the time of joining company at 18 i nearly didnt but was persuaded to do so by a senior colleague

in the ten years or so that have followed i have probably spent 30k on the company so to speak
Yes you do pay tax but only a small amount, this is what it says on my yearly reward statement from work:

Other financial benefits:
Our Private healthcare scheme provides payment for a wide range of treatments. AWG is one of the few
companies in the country that provide private healthcare for ALL employees. This costs you £94* per year which is a
saving in excess of £2,300 per year** if you were to take this cover out yourself
*based on a 20% tax payer **quote provided by AXA PPP for a comparable level of cover
Edited by: "deanos" 19th Aug 2011
So you either pay for the healthcare and get it or pay for the healthcare and don't get it?
you either pay for it at a much much reduced rate or dont

bit of a no brainer to me and at the time i was fit as a flea so wouldnt have had the same view i have now

Banned
Shengis

So you either pay for the healthcare and get it or pay for the healthcare … So you either pay for the healthcare and get it or pay for the healthcare and don't get it?


not quite

I think OP is saying they can take the healthcare option and pay tax on the inland revenues calculation of how much of a benefit to them it is

say the IR reckon its a £1000 benefit then OP will pay £200 tax.

so basically it will cost them 20% of the amount

I would pay it personally if its that small a tax amount (judging by the poor NHS service around my area - I'm 3 years overdue on a 3 year internal important check, my monthly prescription gets sent to the wrong pharmacy over 50% of the time, never answer the appointments telephone numbers, get seen up to 2 hours late for a 6 monthly eye exam even when its a 9AM appointment........)


rant over
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