Dental Work

Dental Work

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Our MD has just been told that he has a problem in that his teeth and jaw are not in alignment and that he requires corrective surgery to remedy this.

The total cost of the treatment will be in the region of £3,000. Unfortunately this treatment is not available on the NHS and our health plan does not cover dental work. If this work is not undertaken his teeth will chip away (which is already happening) with the result that he will require false teeth.

He currently spend 70% of his time overseas either in face to face meetings with our clients or undertaking work in their offices, therefore his personal appearance is of importance.

We are considering paying for the work but then reducing his bonus by the required amount. What are the implications of this re tax and NI etc (please keep it simple as I only have a rudimentary understanding on this area of taxation).

On the IR website I interpret that if the MD obtains the treatment but the company pays for it only class 1 NIC's are payable ' is this correct?

Any advice or alternatives gratefully received.

John

Replies (2)

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By NBWNBW
30th Sep 2004 10:56

Why not?
Why not pay him a bonus now of £5K which will net down to the required £3K. When his annual bonus payment is due you can simply reduce it by the £5K he has already been paid. No worries about BIK or special classes of NI.

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By AnonymousUser
29th Sep 2004 12:15

almost

The company must contract with the surgeon/hospital for the Class A route to apply. If the man makes the arrangements and the company pays the bill then that is pay for PAYE purposes and not a benefit in kind. If you structure it properly then the £3,000 is a benefit in kind to be reported on the annual P11D form and the only NIC payable is Class 1A. He will be liable to income tax on the £3,000 what ever you do.


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