Taxable "benefits in kind"

[Dave h-j]

Hello,

Right - At work I can modify my renumeration package to include extra bits and bobs. However, some of these are classed as taxable benefits, however I'm not sure exactly how much tax I have to pay on them.

At the moment I'm lookin at some critial illness insurance (for me and the wife) to coevr any problems should I be unable to work (as we have 2 kids and she no income)..

Anyway, I can request this and I pay for it out of my wages direct - however I also have to pay the tax portion to. Therefore it mgiht be easier/cheaper to buy it elsewhere.

So, if I pay 12.90/month, what is the tax potion I would also have to pay? Is it simply 12.90*0.20 (or 0.4 for higher tax)?

[cjanderson]

my private medical has a value of £500 so i pay tax on that of £500*40%. simple as that/

When you say you have to pay it out of your wages, then thats not a benefit?

unless its one of those "you could get £500 extra pay or free medical insurance" so you "paying" just means you sacrificing the extra pay to get it.

if you are just paying for it out of your wages, there is no benefit to be taxed :)

[Dave h-j]

It something I can add to my package, and my wages are decreased by that amount per month/year to cover it. The mentions it in the brochure:

Type: Critical Illness
Benefit in kind: Yes
LIability: Taxed as a "Benefit in Kind"

So I assume then that it's an extra £2.58 basic or £5.16 higher..

So what is the benefit? Not paying NI (i.e. saving me around 12p a month??)

[cjanderson]

generally its cheaper to buy the item as part of a group policy rather than get it youself on the open market.

So its cheaper, and yes an NI saving.

[Dave h-j]

Thanks - i think I got confused as when I got promotion in 2006 I automatically got medical insurance, but it showed as a value of £33 and so I assume that was the tax I was paying (rather than the value of the benefit).. I got rid of it soon after..

I don't know why my work can make it easier to understand?