P11D - Private Healthcare

Hi,

We offer our employees Private Healthcare cover where they can opt to add family members.  We cover the cost of employees only and the additional family premium is deducted from monthly salary before TAX and NI.

When completing the P11D, I would account for the benefit costs as follows:

Cost to you or amount foregone £ 100.00 (amount paid by company)

Amount made good or from which tax deducted £ 50.00 (amount deducted from salary)

Cash equivalent or relevant amount (Class 1A NIC) £ 50.00 (amount used to calculate class 1A on P11D)

Is this correct or does this mean our employees are not paying the correct tax?  And has the company paid the correct NI?

Thanks in advance

  • Hi Suzanne,

    Thanks for using Sage City Slight smile

    I notice this query has slipped through without a community response, sorry for the late reply but I thought I’d pop something back to you.

    I appreciate this may be resolved already, but in the Sage 50 P11D software you'd enter the full cost of the benefit in the Annual Premium field, then enter the amount paid by the employee against the Employee Contribution box. 

    If you're completing the P11D form manually without using Sage 50 P11D please contact HMRC for further advice.

    I'd also advise either way that you should contact HMRC to check if an amount PAYE'd needs to be considered on this benefit, as if you are deducting the employee's contribution from their pre tax pre NI pay they're benefitting from lower taxable and NIable pay in payroll.

    If this has answered your question please click More > Verify Answer.

    Regards,

    John Howells
    Sage UKI