Tax return question - Taxable benefit

Tax return question - Taxable benefit

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anonymous-user

Original Poster:

53 months

Wednesday 15th April 2015
quotequote all
A question for the accountants.

I've always filled in my own tax returns since my affairs are quite straight forward (PAYE).
One question on the return refers to taxable benefits. The tax form says to take this number from your P11D.

The main taxable benefit I have is family private health care. On P11D the value of this is shown as approx £1800.
When filling in my tax return, should I be writing the full amount of £1800 as it appears on the P11D or should I be working out the tax liable on this value (i.e. @40%).

I've always been wring the actual value (£1800) but in a recent work communication they seem to be indicating that the actual cost to the employee is 40% of the total cost (i.e. you only actually have to pay the tax).

Have I been getting this wrong all these years?

MEC

2,604 posts

272 months

Wednesday 15th April 2015
quotequote all
You've been doing it correctly.

The £1800 is added to your salary and the tax due worked out on the total, so if you earn say £60K as salary, then you would be taxed as if earning £61,800.

It is also correct then that you do only pay tax (@40%) on the £1800.00. The cost to you is £720.00.

Trailhead

2,628 posts

146 months

Wednesday 15th April 2015
quotequote all
MEC said:
You've been doing it correctly.

The £1800 is added to your salary and the tax due worked out on the total, so if you earn say £60K as salary, then you would be taxed as if earning £61,800.

It is also correct then that you do only pay tax (@40%) on the £1800.00. The cost to you is £720.00.
This

anonymous-user

Original Poster:

53 months

Wednesday 15th April 2015
quotequote all
MEC said:
You've been doing it correctly.

The £1800 is added to your salary and the tax due worked out on the total, so if you earn say £60K as salary, then you would be taxed as if earning £61,800.

It is also correct then that you do only pay tax (@40%) on the £1800.00. The cost to you is £720.00.
Thanks, so is this why HMRC are giving me a tax code of K173? (Actual cost of benefit is £1730)

schmunk

4,399 posts

124 months

Wednesday 15th April 2015
quotequote all
Bandit said:
Thanks, so is this why HMRC are giving me a tax code of K173? (Actual cost of benefit is £1730)
Yes.

MEC

2,604 posts

272 months

Wednesday 15th April 2015
quotequote all
schmunk said:
Yes.
K means it's a negative code so you have lost all your personal allowance and a bit more (£1730) besides. The healthcare will be some of this but possibly not all.

It could be because you have a company car or other benefits, you owe tax from a previous year, or you earn over £120K and have lost all your personal allowance due to higher earnings?

anonymous-user

Original Poster:

53 months

Wednesday 15th April 2015
quotequote all
MEC said:
K means it's a negative code so you have lost all your personal allowance and a bit more (£1730) besides. The healthcare will be some of this but possibly not all.

It could be because you have a company car or other benefits, you owe tax from a previous year, or you earn over £120K and have lost all your personal allowance due to higher earnings?
Thanks again for the responses. Yes, unfortunately I have lost all personal tax allowances.
The private health care is the only taxable benefit I receive so I assume this makes up the whole of the K173 tax code assignment.

Eric Mc

121,779 posts

264 months

Wednesday 15th April 2015
quotequote all
Bandit said:
I've always filled in my own tax returns since my affairs are quite straight forward (PAYE).
All the really awkward tax returns I completed last year were PAYE cases.

PAYE can make Self Assessment VERY complicated.

anonymous-user

Original Poster:

53 months

Wednesday 15th April 2015
quotequote all
Eric Mc said:
All the really awkward tax returns I completed last year were PAYE cases.

PAYE can make Self Assessment VERY complicated.
Eric, out of interest (I know you are an accountant smile ) how much money would you say you could potentially save a higher rate PAYE tax payer by completing the self assessment as a professional? What are the tricks/tips if any that could reduce tax liability?

Eric Mc

121,779 posts

264 months

Wednesday 15th April 2015
quotequote all
Impossible to say until you review the individual's circumstances in detail.

Jockman

17,912 posts

159 months

Thursday 16th April 2015
quotequote all
Your Private Healthcare Provider should show the P11D figure on the schedule of cover.

You should regularly review what you are covered for too - I don't know your circumstances but £1800 would be excessive for me. Are you covered for Maternity issues but unmarried, for example? Do you have a small excess etc smile

anonymous-user

Original Poster:

53 months

Thursday 16th April 2015
quotequote all
Jockman said:
Your Private Healthcare Provider should show the P11D figure on the schedule of cover.

You should regularly review what you are covered for too - I don't know your circumstances but £1800 would be excessive for me. Are you covered for Maternity issues but unmarried, for example? Do you have a small excess etc smile
Its family cover. (wife and 2 kids)