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P11D Critical Illness with Life Cover
Posted by pdorrington on Wed, 01/07/2009 - 22:48
A private limited company is the policyholder of a Critical Illness with Life Cover for one of its directors. Therefore the contract is between the employer and provider of the service which according to HMRC manual CWG2 (page 80) means the premiums are not treated as additional pay subject to PAYE and NI.
However CWG2 states that they may be liable to Class 1A NIC and refers to HMRC manual CWG5.
However when you look at CWG5 (page 22) it only refers to insurance premiums for employee contracts and does not provide any guidance on employer contracts.
Therefore I am uncertain whether the premiums need to be included on the P11D and if so where, and more importantly whether they are subject to Class 1A NIC ??
Any ideas ??
Thanking you in advance.
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So complex!
The tax treatment of critical illness policies is surprisingly complex for such an important product.
Money Marketing have run a series of articles on the tax treatment of these type of policies, which are worth a (long!) read. Try these links:-
https://secure.moneymarketing.co.uk/cgi-bin/item.cgi?id=181578&d=pndpr&h=pnhpr
https://secure.moneymarketing.co.uk/cgi-bin/item.cgi?id=181991&d=pndpr&h=pnhpr
https://secure.moneymarketing.co.uk/cgi-bin/item.cgi?id=182433&d=pndpr&h=pnhpr
https://secure.moneymarketing.co.uk/cgi-bin/item.cgi?id=182847&d=pnd2&h=pndh2&f=pndf2
The Revenue's newly revamped guide to expenses and benefits does not seem to include any forms of insurance, which seems a significant omission.
The starting point in deciding the position must therefore be to check the wording of the contract, to confirm who the contract is between and who it could benefit.
The last point of the above post
is probably the most relevant - who is the beneficiary under the contract?