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Posted Thu, 01 Jun 2023 15:22:46 GMT by Mat
Hello, One of our employees left the business last year, however, their taxable benefit (health insurance) was kept active in error. How do we report this on their P11D? Do we pro rate the overall value/cost only for the time when they were employed? Many thanks!
Posted Wed, 07 Jun 2023 10:19:01 GMT by HMRC Admin 10
Even though the employee is no longer employed by you, you just report the benefit on a p11d as normal.
Posted Wed, 07 Jun 2023 10:25:49 GMT by Mat
Thank you for your reply. Wouldn't that mean that the former employee will be liable to pay tax on the whole amount? Despite not being employed for part of the period when the benefit was active. The error was made by the employer, so employee should not bear the cost for this error?
Posted Fri, 09 Jun 2023 14:02:37 GMT by HMRC Admin 10
If the benefit was still active this would still be treated as taxable and the employee would have a tax liablity on this.
Posted Fri, 09 Jun 2023 14:30:42 GMT by Mat
Hi, The issue is that the person was not longer an employee, but the benefit was still active. So, what you are saying is that, if a company doesn't end the taxable benefit and it stays open for years after the employee has left, an ex-employee would be liable to pay tax on that each year? Surely this is not right. It's not the employee's fault that the benefit was left active after their termination of employment.
Posted Tue, 13 Jun 2023 13:16:14 GMT by HMRC Admin 10
It is not a issue of fault, the employee is still receiving a taxable benefit that otherwise will not be taxed so a P11d would have to be completed.
There are situations where an employer could pay the tax on the benefit for the employee through grossing up or by a PSA.
Posted Mon, 10 Jul 2023 12:09:42 GMT by Mat
Hi, Thank you, this is now understood. Can you please elaborate how an employer can pay former employee part of the tax on benefit they were receiving in error - either through grossing up or by PSA? Thank you.
Posted Thu, 13 Jul 2023 12:58:11 GMT by HMRC Admin 8
You would most likely have to do it as grossing up if it is a former employee.
Thank you.

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