Directors introduce funds into the Company to pay for private medical insurance which is then paid out through the Company. Will there be a benefit in kind charge for this?
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Yes - of course, it is a BIK
There are two separate transactions:
"Directors introduce funds into the Company", so DR Bank - CR DLA"private medical insurance which is then paid out through the Company", so DR Remuneration/Benefits in P&L - CR Bank, and put it on forms P11D.
BIK
I would go with the first entry but the second would be DR DLA and CR Bank. No P11D applies.
Whoa!!
Exactly what's happening here ?
Has he just lent the company the money ?
In which case - yes - there's a BIK.
Or has he reimbursed the company for the cost of the PHI?
In which case, the BIK is reduced (to zero?) by the reimbursement.
I'm assuming here that the contract is between the company and the PHI company. If that's not so, I'll be changing my advice.
BIK
Assumed it was a straight reimbursement. Why else was it the identical sum to the PHI payment ?
First question
Seems logical, qhas - but the first question is "who is the contract between ?"
Contract irrelevant
It does not matter who the contract is between if made good.
If the cost is made good then there is no benefit in kind to declare (or pay Nat Ins on or pay Income Tax on).
It is clearly not a BIK without first considering the question below.
The key question is as follows:
" When the payments are made to the insurer are they debited to P&L and taken as a company expense or are they payments debited to DLA and thus removing the potential BIK? "
OR
" If the payments are initially debited to the P&L as a company expense is the P&L cost reduced to nil by a credit to the P&L cost and debit to directors loan account thus removing any benefit in kind? "
Made Good or Loan ?
It does not matter who the contract is between if made good.
Has he made it good ? Or has he lent the company some money ?
That's not clear from the OP.
Second thoughts
I took the question as stating that the directors had introduced funds which were used to pay for medical insurance, not just for the directors, but for staff as well. Hence, my answer that it is a BIK and to the extent that medical insurance cover was provided to staff, it remains a BIK.
However, to the extent that the medical insurance cover was provided to the directors, I agree that as it was paid by the company, it is still technically a BIK, but one of nil value.
Just wondering why they do that.
Wouldn't they be better getting the insurance employee-NI free ?