Chartered Management Accountant
Midas Accountancy
Share this content
0
5
4202

OK, maybe not so straightfoward P11D question after all!

I posted a question earlier in the week regarding a client that was payrolling their BUPA benefit to their employees. It appeared to be straightforward. the company was paying for BUPA and the employees were having the cost of the BUPA healthcare deducted from their payslips. Easy peasy. Enter amount of healthcare for employee on P11D and enter the same amount in the 'Amount Made Good' box.

The stroppy admin assistant that administers the payroll has waited until the day before the filing deadline to inform me (in an entirely irritating manner) that the employee taking up the BUPA is given a BUPA allowance in their Pay. So the amount of the BUPA benefit is added to their gross salary and shown as a separate line on the payslips. Tax and NICs is deducted. Then the BUPA deduction is taken out of the net pay.

The BUPA allowance is being added to the gross salary and having tax deducted but not NICs. This is why she is saying that it is a benefit.

I don't understand, surely if they are increasing the salary by £x to cover the bupa allowance this should be taxed and NICd in the same way as if they were to provide a salary increase. This would be mean the employee is out of pocket as the same amount is being deducted from the gross salary.

I am confused!

Thanks in advance for any help or advice!

Many Thanks

Replies

Please login or register to join the discussion.

06th Jul 2012 08:12

You can only ask

It appears mad.

If they are not dealing with the benefit properly I would recommend you include it on the P11D.

You then need to get the payroll issues sorted out so ask the client:

why they don't charge NIC, and

why they deduct the benefit.

Thanks (0)
06th Jul 2012 10:03

So, which is it?

"the amount of the BUPA benefit is added to their gross salary and shown as a separate line on the payslips. Tax and NICs is deducted."

or

"The BUPA allowance is being added to the gross salary and having tax deducted but not NICs."

The first would be the correct handling of a payrolled benefit.  As the employee has made good the cost, there is no net taxable benefit, but it should still be reported on forms P11D.  The employee will have suffered ee's NIC under this treatment, which he would have avoided if the benefit had not been payrolled.

Thanks (0)
06th Jul 2012 10:13

It was confusing but I read it differently

I understand the first example was just setting out how the payslip shows the information and the second example was explaining that the BUPA allowance didn't have NICs calculated on it.

Thanks (0)

Peter is right

the bupa allowance is added to the gross salary and taxed but no nic deducted. On the face of the payslip you seethe deduction of tax and nic overall and then the bupa amount is deducted from the net pay.

 

thanks for your help guys. sorry i wasnt very clear!

Thanks (0)
06th Jul 2012 12:55

In that case ...

The P11D treatment is as I said before - show it as a benefit along with the same amount made good, giving a nil taxable benefit (and no Class 1A NIC due).

Get your own back on the stroppy admin assistant by telling her that she now needs to file an amendment to the 2011/12 P35 to account for the Class 1 NIC (both Er's and Ees') on the allowance added to salary and for that NIC to be paid over.

Thanks (1)