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BUPA rebates and p11d's

BUPA gave a client a rebate on Group Health premiums. Should I resubmit P11d's?

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A client gives employees BUPA medical aid as a BIK. We prepared the p11d’s and submitted them. However, BUPA has now issued a rebate on group premiums paid for the period. The rebate letter and cheque were dated 8th July. Was this date chosen deliberately to prevent confusion with submitting the p11d’s? Should I resubmit the p11d’s? Has anybody else seen this?

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By David Ex
04th Aug 2021 11:11

What period did the rebate relate to? Why was it given? How was it calculated? How much was it?

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Replying to David Ex:
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By exceljockey
04th Aug 2021 11:53

All BUPA customers have received a rebate due to BUPA making money during COVID. I have no idea how it was calculated, they don't go into that detail and haven't broken down the amount per employee like they would the premiums paid. It is just a lump-sum rebate.

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Replying to exceljockey:
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By Hugo Fair
04th Aug 2021 12:01

Well that appears to answer your question doesn't it?
If the rebate was to the customer (the company) and not 'allocated' to individual employees, then by default the BiK for each employee is unchanged.
How the company treats it is another matter.
In particular whether any of it is 'returned' to employees *may* have an impact on this year's BiKs or PAYE or ...

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Replying to Hugo Fair:
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By lionofludesch
04th Aug 2021 12:32

Hugo Fair wrote:

Well that appears to answer your question doesn't it?
If the rebate was to the customer (the company) and not 'allocated' to individual employees, then by default the BiK for each employee is unchanged.

What's the cost of the benefit to the employer ?

I would say less than you thought - albeit that the rebate wasn't in the same year.

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Replying to lionofludesch:
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By Hugo Fair
04th Aug 2021 13:37

As usual, I don't think we're disagreeing - although my previous answer was too simplistic (almost glib I hear you say).

1. The original 'cost to the employer' is determined by BUPA after considering the circumstances of the individual ... whereas the rebate is unallocated other than as a global amount to the employer. Without knowing anything about why a rebate (or indeed the factors determining the amount of it), we cannot be certain that it 'belongs' to the individual employees at all.
For example it might be more akin to a commission rebate?
As I said, what the employer does with it is another matter - including, if it is to be distributed, whether that includes ex-employees and described/taxed as what?

2. As it would appear that the manner & reason for any distribution of the rebate is at the discretion of the employer, I can see no reason that it is not open to them to treat it as a reduction/discount on this year's premium. Although that again introduces the problem of any previous members not renewing this year, or vice-versa.

OP hasn't answered David's question as to the value of total rebate, so it might be simplest for the employer just to retain it!

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Replying to Hugo Fair:
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By Tax Dragon
04th Aug 2021 14:21

I don't understand your "distributed" point. Employer paid BUPA £10k at the start of the year, gets £1k rebated, cost to employer for the year (the figure on which BIKs are based) is £9k. The £1k isn't being distributed any more than the £10k was collected.

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Replying to Tax Dragon:
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By Hugo Fair
04th Aug 2021 14:58

Sorry, my fault. I was living in the past, when BUPA was often a salary sacrifice item (so collection came into it obliquely) ... until that facility was withdrawn!

Nevertheless if you replace 'distributed' with 'allocated', then I think my original point remains?
The original 'cost to employer' was determined by BUPA (by summing the costs quoted for each individual member) ... so if they haven't provided a reverse set of figures (per member), there appears to me to be no automatic determination of a reduced 'cost to employer' for each individual member.
Hence it seems to be entirely up to employer to decide how the rebate is treated (including whether it has any impact on the BiK value for individual employees).

Moving more into your sphere ... is the 'cost to employer' capped at the actual cost expended by employer direct to supplier?
I seem to recall it is treated more as a minimum (for purpose of valuing BiKs), but can include other costs incurred by the employer - such as the administrative overheads of offering the benefit. If so, then a subsequent rebate that isn't 'allocated' to specific members might not automatically reduce the BiK value?

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Replying to exceljockey:
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By David Ex
04th Aug 2021 12:02

exceljockey wrote:

All BUPA customers have received a rebate due to BUPA making money during COVID. I have no idea how it was calculated, they don't go into that detail and haven't broken down the amount per employee like they would the premiums paid. It is just a lump-sum rebate.

Absent any detail, not sure how you could make changes to the figures returned for each individual employee.

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Replying to David Ex:
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By exceljockey
04th Aug 2021 13:12

David Ex wrote:

Absent any detail, not sure how you could make changes to the figures returned for each individual employee.

Apportion it on the same basis they paid their premiums. It wouldn't be hard to do.

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Replying to exceljockey:
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By David Ex
04th Aug 2021 16:36

exceljockey wrote:

David Ex wrote:

Absent any detail, not sure how you could make changes to the figures returned for each individual employee.

Apportion it on the same basis they paid their premiums. It wouldn't be hard to do.

Wouldn’t be hard to do, the question is whether it’s the right thing to do. With zero information in the OP about the rebate, it’s all guess work. Does your apportionment “work” for starters and leavers, for example?

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Replying to David Ex:
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By lionofludesch
04th Aug 2021 14:04

David Ex wrote:

exceljockey wrote:

All BUPA customers have received a rebate due to BUPA making money during COVID. I have no idea how it was calculated, they don't go into that detail and haven't broken down the amount per employee like they would the premiums paid. It is just a lump-sum rebate.

Absent any detail, not sure how you could make changes to the figures returned for each individual employee.

Letter.

It's the ultimate fall-back option.

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Replying to lionofludesch:
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By David Ex
04th Aug 2021 16:39

lionofludesch wrote:

David Ex wrote:

exceljockey wrote:

All BUPA customers have received a rebate due to BUPA making money during COVID. I have no idea how it was calculated, they don't go into that detail and haven't broken down the amount per employee like they would the premiums paid. It is just a lump-sum rebate.

Absent any detail, not sure how you could make changes to the figures returned for each individual employee.

Letter.

It's the ultimate fall-back option.

I meant establishing the amount of the revised benefit rather than the reporting mechanism. A pro rating might be appropriate; it might not. If the amounts are trivial, no-one may care much.

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Melchett
By thestudyman
05th Aug 2021 09:15

I would go back to bupa im certain they know how that value was made up, per employee.

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By AKing
09th Aug 2021 10:02

I think it is reasonable to ask BUPA for a breakdown, if you are unable to apportion the rebate between employees yourself.

Their letter states "Please arrange for members of the group who have paid all or part of their premium to receive their share of your group's rebate".

This implies the rebate is due back to each employee - so I would also include it on their P11D. Which year you allocate it to probably depends on how much admin time it would take. I'm inclined to do it in the year of receipt of the rebate - but this could impact employees who leave.

HTH

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picture of a mushroom
By mushroom_dept
09th Aug 2021 10:52

We, too, have had the BUPA rebate. For those who have been asking about specific numbers, our premium for the current year (early (after 6th) April '21 to '22) was £10,931.62, last year's was £10,968.84. The rebate is £914.86, received in July '21.
From the BUPA covering letter there is a web link to FAQs www.bupa.co.uk/rebate. Here it states that the rebate covers 23rd March to 30th September 2020. Under 'how did you calcuate the rebate' it says it is relative to the premiums paid.
Clearly the rebate is not related to the current year's premium but also at the time of P11d preparation we had no knowledge of it. Also the period covered is not in line with the period covered by the premiums.
My view is that I will apportion the rebate against this year's premium which will be declared in P11ds at the end of the current tax year (April 2022) on the basis that this was the year of receipt. The apportioned rebate ranges from £34 for the youngest employee to £201 for the oldest.
I accept that leavers could be an issue but am in the fortunate position of having a very stable workforce, especially at the level where healthcare BiK is available. In any case they won't even notice the difference so it certainly isn't going to cause me any sleepless nights.

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Replying to mushroom_dept:
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By Hugo Fair
09th Aug 2021 12:14

Now we have more salient facts (like the wording from BUPA that accompanied their rebate - which would have been really useful to know at the time of OP), your approach seems eminently pragmatic and sensible.
Particularly after noting your parting comment that "In any case they won't even notice the difference"! For those on BR, the monthly change in net pay will be between £0.56-£3.35 ... and anyway I can't remember when an employee last complained about paying less tax!

FWIW, from the wording of BUPA's letter it appears that apportioning the rebate to individual members is just a suggestion/option (not a contractual term).
So, as I raised before, the question arises as to whether the 'cost to employer' is capped at the actual cost expended by employer direct to supplier? Or is treated more as a minimum (for purpose of valuing BiKs), but can include other costs incurred by the employer - such as the administrative overheads of offering the benefit.
If so, then a rebate that isn't 'allocated' to the employer cost of providing the benefit for a specific member would not automatically reduce the BiK value.

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Pay Academy Director
By nikicaister
19th Aug 2021 11:08

We have a client where this has arisen. HMRC covered it in their April 21 bulletin. Guidance reads:

"Employers who report medical benefits through Payrolling Benefits in Kind (BiKs), or the legacy P11D process, may find that the 2020 to 2021 taxable value has changed. HMRC has been made aware that some medical providers may make refunds to employers if services were not provided as originally specified.

The reportable value of the BiKs is the cost less any refund related to that year, regardless of when it is received. For employers on Payrolling BiKs, you may need to adjust the taxable value by way of an amended FPS, and the correct value on the P11D(b) submission.

For employers on the legacy P11D process, to ensure that your employees are not overtaxed, please make sure you have any discussions with your provider before the P11D deadline and report the correct taxable value on P11D submissions and on the P11D(b)."

The last point is somewhat frustrating as all the credits appear to be issued or yet to be issued, after the deadline for P11D submission of 6th July. Plus as we all know, you cannot re-submit P11Ds electroncially. So the amended P11Ds will have to be submitted in paper and sent to HMRC in the post.

One assumes that the P11D(b) calc will also need restating and result in an overpayment by the client (who has already paid over the original Class 1A) so rather a lot of extra work. HMRC seem quite clear in their guidance that you cannot use a "cash" basis so you cannot reflect the credit in this year's calculations.

Also to note - we are not necessarily talking small amounts. My client has had a rebate of £24k (so worth over £3k in reduced class 1A) and it is not a huge payroll by any means - circa 250 staff.

Final point and I will shut up, Bupa cannot confirm that this is a single and only rebate - there maybe more reabtes to come...

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