Providing medical insurance or life cover to employees?

When giving medical and insurance benefits to staff employer should arrange and pay the provider directly.

Medical Insurance

Step 1: Ascertain whether benefit employer wishes to provide is exempt or not.

Which benefits are exempt? Click here for answer

Step2: If benefits are not exempt, we need to report them to HMRC and deduct tax and NIC but it depends on who pays for the benefit.

Who PaysWho pays What
Employer arranges and pay directly to insurance companyEmployer Class 1A NIC via P11d

Employee – income tax via Self-assessment but pays no NIC.
Employee arranges but employer pays to insurance companyEmployer Class 1A via P11d  


Employee – income tax via Self-assessment   Employee pays NIC via payroll by adding value of benefit to employee’s earning.
Employer reimburses employeeEmployer pays Class1A and employee pay
Class1 NIC and Tax. All collected via payroll.

Conclusion: Best option is employer to arrange and pay provider directly. Please note cost of insurance and class 1A NIC will be tax deductible for employer as an expense.

Source:

Expenses and benefits: medical or dental treatment and insurance – GOV.UK (www.gov.uk)

Life Cover

No liability to income tax arises if the employer arranges and pays for a `retirement or death benefit`.

Retirement or death benefit – means a pension, annuity, lump sum, gratuity or other similar benefit which will be paid in the event of the employee’s retirement or death.

Source
Section 307 ITEPA 2003

Should I submit my return early ?

Thousands of individuals file their tax returns on the first day

The tax year has ended.

Main benefit of submitting tax return as soon as possible is that the enquiry window runs for a full 12 months from the date the tax return is received. So for example a return received by HMRC on 20 June 2018, the enquiry window will run to 20 June 2019 – EM1501

I have already filed mine.

Fascinating facts about Self Assessment