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Posted Wed, 28 Jun 2023 14:13:52 GMT by BKen
Hello - I am looking for advice on eligible salary sacrifice schemes for employees contributing to their private medical insurance benefit. The company is paying for the individual single premium as a benefit in kind. However, employees can choose enhanced cover for partners and families, which the employee will then pay for through payroll deductions. My understanding in this scenario is that this contribution to medical cover is not an effective salary sacrifice scheme eligible for tax and NI savings, and should instead be set up as net deduction rather than as gross deduction. However where processed as a gross deduction, I understand the contribution would be reportable via P11D to incur the tax liability. Would it be possible to get confirmation on this scenario as there seem various company practices dealing with this in different ways.
Posted Wed, 05 Jul 2023 14:27:53 GMT by HMRC Admin 20
Hi BKen,

We cannot advise you on how you should operate Salary Sacrifice or benefits you provide to emloyees.  What we can comment on is the tax and NIC position.  
Medical benefit is subject to Class 1A NIC, payable by the employer only.  Therefore, if you provide the benefit via Salary Sacrifice, the employee will save the NIC they would have paid on the salary foregone.  The employee will still pay tax on the amount, reported on a P11D, or through Payrolling BIKs if you have registered.
If the cost of the medical or dental treatment or insurance is less than the amount of salary given up, report the salary amount instead.

Thank you.

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