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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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I work for a US company but am a UK tax payer. My company

Customer Question

I work for a US company but am a UK tax payer. My company offers a flex benefits package, currently my selection includes Healthcare, Increased Life insurance premiums for myself and spouse and Critical Illness cover. I am not taxed at source for these benefits and have just received notification from HMRC that I owe them monies. I realize Medical cover is a taxable benefit in the UK and accept I need to pay this tax but as the other benefits I need to know whether these are considered benefits in Kind. If so one option I would have would be to reduce these and transfer the balance into a company pension scheme. Would this also incur tax at the higher rate of 40%
Submitted: 10 months ago.
Category: Tax
Expert:  bigduckontax replied 10 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

Life Insurance; Accounting Web states:

'The tax rules on the provision of life insurance by the employer: As long as the employer arranges the life insurance and pays the insurance provider direct, the provision of life insurance is not a taxable benefit on the employee.'

Authority: ITEPA 2003, s 307

For Critical Illness Cover; HMRC Information Sheet EIM21820 confirms that the employee will not be taxable on a benefit in kind if the conditions in BIM45525 are satisfied. are satisfied.

As neither of these benefits is likely to be taxable in your hand why not just leave them in place?

I do hope that you have found my reply of assistance.

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