Tax Return / Benefits In Kind / Private Health
Discussion
Just sorting out my tax return for 2016/17 but I've confused myself with some of the information on my payslip.
We used to have private health care paid for by the company, obviously had to declare this as a benefit-in-kind on my tax return so HMRC could take their 40%, no issues there. However the company decided to buy us out of the scheme so salary increase and an option to purchase health care through the company at a preferential rate. The healthcare cost was deducted pre tax (salary sacrifice) but has to be declared as the money is taxable reason for it being done through salary sacrifice is that is saved us a bit as it wasn't liable for National Insurance.
So on my payslips for last tax year it shows my salary minus pre tax deductions (salary sacrifice) for pension and healthcare which gives total payment for the month after deductions (so this figure is liable for NI), but moving to the "taxable pay" section it shows the total payment with the health care element added back in again. This tallies with what is shown on my P60 for the year and therefore the information HMRC has for my pay for that year.
The confusion comes about because in the benefits in kind section on my pay slip the private health care cost is also shown. Do I have to declare this to HMRC on my tax return or do I just ignore it as it's already been declared as taxable income? I don't want to end up paying tax on it twice but it does have me a bit confused as to why it's being shown as a benefit when already included in taxable income.
Thanks for your help!
(Hopefully I should be able to return to normal PAYE in a year or two as the company jacked up the price of the health insurance so I opted out and I've stopped my child benefit payments so they don't have to claw that back from me anymore either. Nothing much else to declare after that aside from a few charity payments. I hate tax returns!)
We used to have private health care paid for by the company, obviously had to declare this as a benefit-in-kind on my tax return so HMRC could take their 40%, no issues there. However the company decided to buy us out of the scheme so salary increase and an option to purchase health care through the company at a preferential rate. The healthcare cost was deducted pre tax (salary sacrifice) but has to be declared as the money is taxable reason for it being done through salary sacrifice is that is saved us a bit as it wasn't liable for National Insurance.
So on my payslips for last tax year it shows my salary minus pre tax deductions (salary sacrifice) for pension and healthcare which gives total payment for the month after deductions (so this figure is liable for NI), but moving to the "taxable pay" section it shows the total payment with the health care element added back in again. This tallies with what is shown on my P60 for the year and therefore the information HMRC has for my pay for that year.
The confusion comes about because in the benefits in kind section on my pay slip the private health care cost is also shown. Do I have to declare this to HMRC on my tax return or do I just ignore it as it's already been declared as taxable income? I don't want to end up paying tax on it twice but it does have me a bit confused as to why it's being shown as a benefit when already included in taxable income.
Thanks for your help!
(Hopefully I should be able to return to normal PAYE in a year or two as the company jacked up the price of the health insurance so I opted out and I've stopped my child benefit payments so they don't have to claw that back from me anymore either. Nothing much else to declare after that aside from a few charity payments. I hate tax returns!)
Eric Mc said:
Has your PAYE Coding been amended by HMRC to tax you on the health insurance? That is usually the effect a declaration on a P11D causes.
Yes it was from the point that I had private health care paid for by my company and therefore truly a benefit in kind but this is the first return I've had to do since we were bought out of it. I suspect I'm overpaying tax at the moment as a result of this but that will all come out in the wash as I submit my returns for the next year or so.To the other poster, my P60 doesn't mention benefits just taxable pay, which as I said includes the health care payment added back in, and tax deducted (and NI).
Thanks for the responses, it's okay I've figured it out having found this piece of information buried in the far reaches of our company Intranet:
The P11D form shows your benefits for the current year and enable HM Revenue & Customs department to recover the tax on those benefits
• xxxxxxxxx has a dispensation to tax these benefits at source through the Payroll department. This means the monthly value of the benefit is added to employee's taxable pay.
• The actual values of the benefit is included in the taxable pay on the P60 tax form.
• The employee therefore do not need to include this part in their self-assessment form. If they do fill this part out separately, then they will end up being taxed twice for their benefits.
So no need to declare it to HMRC. I now need to check back to previous years as I'm sure this wasn't the case when our health insurance was being paid for by the company. If it was then I've overpaid my tax!
The P11D form shows your benefits for the current year and enable HM Revenue & Customs department to recover the tax on those benefits
• xxxxxxxxx has a dispensation to tax these benefits at source through the Payroll department. This means the monthly value of the benefit is added to employee's taxable pay.
• The actual values of the benefit is included in the taxable pay on the P60 tax form.
• The employee therefore do not need to include this part in their self-assessment form. If they do fill this part out separately, then they will end up being taxed twice for their benefits.
So no need to declare it to HMRC. I now need to check back to previous years as I'm sure this wasn't the case when our health insurance was being paid for by the company. If it was then I've overpaid my tax!
HMRC are attempting to abolish Self Assessment. There are two strands to this effort. One is the introduction of Making Tax Digital for the self employed and landlords. The other is that they are hoping that they will be able to gather together all the data they get about a taxpayer from third parties (banks, employers, pensions, building societies etc etc) and accurately collate this information and charge the tax correctly either through adjustments to PAYE codings or by issuing an actual tax assessment notice requesting payment.
This all sounds marvellous EXCEPT when they issue these assessments, a taxpayer has a maximum of 60 days to notify HMRC if there are any errors or omissions on the assessment. In other words, if HMRC gets it wrong, it will be the taxpayer's fault and they will be charged penalties and interest if they do not notify HMRC of the errors HMRC has made.
This all sounds marvellous EXCEPT when they issue these assessments, a taxpayer has a maximum of 60 days to notify HMRC if there are any errors or omissions on the assessment. In other words, if HMRC gets it wrong, it will be the taxpayer's fault and they will be charged penalties and interest if they do not notify HMRC of the errors HMRC has made.
Eric Mc said:
HMRC are attempting to abolish Self Assessment. There are two strands to this effort. One is the introduction of Making Tax Digital for the self employed and landlords. The other is that they are hoping that they will be able to gather together all the data they get about a taxpayer from third parties (banks, employers, pensions, building societies etc etc) and accurately collate this information and charge the tax correctly either through adjustments to PAYE codings or by issuing an actual tax assessment notice requesting payment.
This all sounds marvellous EXCEPT when they issue these assessments, a taxpayer has a maximum of 60 days to notify HMRC if there are any errors or omissions on the assessment. In other words, if HMRC gets it wrong, it will be the taxpayer's fault and they will be charged penalties and interest if they do not notify HMRC of the errors HMRC has made.
Also not really helped by the government introducing things like the cap on child benefit payments which was one of the reasons I had to start doing self assessment again. This all sounds marvellous EXCEPT when they issue these assessments, a taxpayer has a maximum of 60 days to notify HMRC if there are any errors or omissions on the assessment. In other words, if HMRC gets it wrong, it will be the taxpayer's fault and they will be charged penalties and interest if they do not notify HMRC of the errors HMRC has made.
C0ffin D0dger said:
Thanks for the responses, it's okay I've figured it out having found this piece of information buried in the far reaches of our company Intranet:
The P11D form shows your benefits for the current year and enable HM Revenue & Customs department to recover the tax on those benefits
• xxxxxxxxx has a dispensation to tax these benefits at source through the Payroll department. This means the monthly value of the benefit is added to employee's taxable pay.
• The actual values of the benefit is included in the taxable pay on the P60 tax form.
• The employee therefore do not need to include this part in their self-assessment form. If they do fill this part out separately, then they will end up being taxed twice for their benefits.
So no need to declare it to HMRC. I now need to check back to previous years as I'm sure this wasn't the case when our health insurance was being paid for by the company. If it was then I've overpaid my tax!
Turns out it was being taxed at source for previous years. Luckily for me I only opted into the scheme in the 2015/16 tax year so I was able to go back and amend my return. Roughly £700 less that I owe HMRC + they've adjusted my tax code as they'd assumed it would be ongoing so I'm overpaying a bit now. Just need to get the 2016/17 return in now and hopefully it will all get resolved (eventually).The P11D form shows your benefits for the current year and enable HM Revenue & Customs department to recover the tax on those benefits
• xxxxxxxxx has a dispensation to tax these benefits at source through the Payroll department. This means the monthly value of the benefit is added to employee's taxable pay.
• The actual values of the benefit is included in the taxable pay on the P60 tax form.
• The employee therefore do not need to include this part in their self-assessment form. If they do fill this part out separately, then they will end up being taxed twice for their benefits.
So no need to declare it to HMRC. I now need to check back to previous years as I'm sure this wasn't the case when our health insurance was being paid for by the company. If it was then I've overpaid my tax!
One last question if I may 
Finally completed my 2016/17 return last night and the calculation shows that I overpaid by £500 (nice!). I do however owe them roughly £1000 from my 2015/16 return that they are currently collecting through my tax code / PAYE. What will they do about the £500 I'm owed? Will they just pay it into my bank account or will they use it to reduce the amount I owe from the 2015/16 year and adjust my current tax code accordingly?
Thanks.
Finally completed my 2016/17 return last night and the calculation shows that I overpaid by £500 (nice!). I do however owe them roughly £1000 from my 2015/16 return that they are currently collecting through my tax code / PAYE. What will they do about the £500 I'm owed? Will they just pay it into my bank account or will they use it to reduce the amount I owe from the 2015/16 year and adjust my current tax code accordingly?
Thanks.
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