Medical treatment

[Leftie]

I was wondering how the tax man views medical treatments paid for by employers?

I am guessing that they would see it as a BiK?

What if the employee is a 'key man', without whom the business cannot function?

[Eric Mc]

Medical treatment paid by an employer is definitely a Benefit in Kind.

As is Medical Insurance paid by an employer on behalf of an employee or director.

Specific Key Man INSURANCE IS an allowable cost to the business and does not constitute a Benefit in Kind. However, the policy must be clearly a Key Man policy and the terms must be set out that so the beneficiary of the policy is not the individual but the business i.e. the policy pays up to cover lost productivity to the business or the cost of replaing the individual on a temporary basis etc. Any funds paid out by the policy should be paid to the BUSINESS, not the individual.

[Leftie]

Eric Mc said:

Medical treatment paid by an employer is definitely a Benefit in Kind.

As is Medical Insurance paid by an employer on behalf of an employee or director.

Specific Key Man INSURANCE IS an allowable cost to the business and does not constitute a Benefit in Kind. However, the policy must be clearly a Key Man policy and the terms must be set out that so the beneficiary of the policy is not the individual but the business i.e. the policy pays up to cover lost productivity to the business or the cost of replaing the individual on a temporary basis etc. Any funds paid out by the policy should be paid to the BUSINESS, not the individual.

Thanks Eric.

It is for a co-director. I am trying to work out if it is cheaper overall to pay them and let them pay the BiK taxation but make sure they stay below the 40% bracket or simply pay it personally as the payment will be out of share dividends upon which we have only paid 20%. Probably not much in it and the later is simpler.

[Eric Mc]

I presume you are talking about the 20% Corporation tax charge arising on the business profits before the dividend is declared.

As you are no doubt aware, individuals effectively pay no Income Tax on dividends as long as their income stays below the Higher Rate tax bracket.