BIK calculation

I appear to be confused by a BIK calculation. I receive private medical insurance benefit from my employer and understand this is taxable at the higher rate of income tax that I pay. HMRC have added the value of my medical insurance to my taxable earnings which has reduced my personal allowance (I am earning over 100k). This has the effect of a 20% tax being applied to that benefit (since my personal allowance is reduced by 50p in every £1 above the £100k threshold). Additionally, HMRC have further reduced my personal allowance by the value of my medical insurance benefit. This has the effect of applying a further 40% tax to my medical benefit, so 60% in total. I spoke to HMRC about this and they didn't do a good job of explaining it - other than to say 'the calculation is correct'! I am aware of the 60% tax trap between £100k and £125k - but hadn't realised this is applicable to BIK as well. Does this all seem correct?

Hi,

Yes would be correct. If you have a taxable benefit in kind.

BIK, this will be included in your total income calculation to allocate the correct personal allowance due if earnings over £100K.

As the BIK is included in your tax code and if a higher rate tax payer then you would pay tax at the higher rate tax band on the benefit you eould not pay a higher rate of tax on the BIK.

Thank you.

Hi There I get health insurance through my employer, how is the BIK calculated. i am not fully aware on this.,

Hi,
Unfortunately, it is not possible to check individual tax records through this forum. If you have a question which relates to your personal tax situation or tax code please contact our Income Tax team for advice.
Income Tax: general enquiries
Thank you.
 

Hi - I am looking into my tax calcs for the coming year and am picking this topic up again. In my original post, I mistakenly ssaid the impact was a 60% tax on my medical benefit but in fact it is more than that. To explain in another way: - Private Medical Insurance declared on P11D and stated in my PAYE account as a BIK (as expected). This ensures the correct tax is calcualted on this benefit. No problems here. - IN ADDITION, the SAME BIK AMOUNT has been added to my overall taxable income fot the tax year. This continues to make no sense to me and would be great to get an explanation. This looks like a double-counting of my single benefit. Note that my employer is submitting the Medical Insuracne BIK value to HMRC via the P11D form and I am also declaring it in my annual self assessment taxt return. Could this be the issue? Would be grateful for a meaningful explanation!