Private Health Care BIK Free if excluded as Allowable CT

Private Health Care BIK Free if excluded as...

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The seller of Private health care has advised my client that if the expense is shown as a disallowable expenses on CT return, then it does not rank as a BIK.

Any views please?

Replies (8)

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By Steve Kesby
02nd Apr 2014 14:43

I suspect that...

... the seller of private health care is more interested in selling private health care than getting their facts straight.

If you add it back in the CT comps it doesn't stop there being a taxable benefit; you just don't then get CT relief for it. It's called shooting yourself in the foot. Does the policy cover self-inflicted gun shot wounds?

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By stratty
02nd Apr 2014 14:44

Wouldn't have thought so

I do not understand why you would do this but let's say that you did there would definitely still be a BIK.

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Stepurhan
By stepurhan
02nd Apr 2014 15:02

Let me check

Benefit to employee - Yes

Paid for by employer - Yes

Sounds like a benefit in kind to me. The value of the benefit is the cost to the employer. Whether they then obtain tax relief for that cost is irrelevant. I'm sure you knew that already though, and are just double-checking there isn't some change that you've missed.

You could always ask the private health care provider to expand on the legal basis for their claim. I suspect they will just give you a blank look or irrelevant bluster.

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RLI
By lionofludesch
02nd Apr 2014 15:12

Rubbish

Absolute nonsense.

Buy your health insurance from a more reputable company.

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By John Cotter
02nd Apr 2014 15:16

How not to sell PHI

Thanks all - just as I thought.  There was always the possibility that the sales individual understood Tax law better than I.

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By Phil Rees
02nd Apr 2014 16:34

Unwritten ESC

There used to be an unwritten concession that allowed you to add back items in the CT comp instead of putting them on the P11d.

That became a thing of the past when Class 1A NICs were introduced.

In other words this was a very long time ago, so presumably the sales person was quite old. (Not as old as me obviously.)

 

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By mikeyban
02nd Apr 2014 20:03

Was there something in the past that there was a choice.... Either declare private health care on payments or when you claim on it? Or am I dreaming?

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By DMGbus
04th Apr 2014 15:12

Sole Trader + p'ships family member BIKs

I believe that if ALL of the following circumstances are present, then the BIK is avoided:

Employer is a sole trader or partnershipThe employee is a close family member of the proprietor(s)The cost is charged to drawings (or disallowed for tax)

In practical terms I last came across the scenario of disallowance removing BIK in the context of a family business where the son had a car but no BIK declared as instead the private proportion was increased to reflect private use as a close family member - this was quite a few years ago so the rule (it was a concession) might no longer be valid, but it certainly was valid there in the past - I remember that I checked it out thoroughly at the time.

In a Ltd Co context the BIK can be avoided by debit to a shareholder or directors loan account - but for an unrelated employee this is probably not possible.

It is a popular misconception that disallowance in the CT comp removes the BIK.

There is one other case where a BIK on PHI was not(*) taxed as a BIK.  Employees who were "lower paid" and therefore subject to P9D rather than P11D reporting of benefits.    I well recall a lecture given to Midlands accounants by an HMIT about BIKs and I definitely recall him saying something along the lines "even if we received one we wouldn't know what to do with it" referring to P9D forms.  (I really wish that I'd taped or video recorded this lecture!).   The design of the P9D was such that certain benefits could not be reported (inferring certain benefits not taxable for "lower paid"), so lower paid employees did then get a tax break on PHI.

(*) I talk in past tense as, again, it was quite a few years ago and the rules may have been tightened up since.

 

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