So, my wife is doing her personal tax return, and it asks her to enter the value of any benefits listed on her P11D. On her P11D she has private medical insurance listed. So she enters that and it calculates at the end that she owes tax on this (plus the child benefit payback).
So here is my main confusion - if you do the gov.uk "do I need to do a personal tax return" online questionnaire it only says she needs to do one as she received the child benefit. So if she hadn't received the child benefit, she wouldn't do the tax return and she wouldn't be being taxed on the medical insurance.
This makes no sense to me - I must be missing something simple here!
Not any sort of accountant but I THINK what happens if you don’t fill in a tax return is that your tax code gets adjusted to claw back the tax on BIK. There is no free lunch.
Not looking for a free lunch 🙂 Just annoyed that the cost of lunch (on top of starter of child benefit payback) needs to be paid in one big hit in January rather than spread over the year via PAYE (if that is the case).
Would the fact that there is no mention at all of the private medical insurance on her payslip suggest she has not been paying the tax on it monthly? And therefore she does need to pay it all now as demanded? I still don't understand how she should know she needs to do a return if she didn't need to do one for the child benefit.
In contrast, on my payslip I see a monthly deduction of around £80 for "Private Medical".
What does her employer say? If they are declaring it but haven’t yet included it in the payroll calcs, is it a new benefit starting in the tax year 2024/25? The tax will need paying at some point. If this is a last minute tax declaration, the chances to spread the additional payment over more time (via a new tax code or payments spread over up to 12 months) is more limited than getting it sorted earlier (don’t ask how I know, but I learned my lesson and don’t complete self assessment in Jan any more).
The real answer (not a judgement, just the fact) is because we're all responsible for our tax affairs, ignorance isn't a defence and if you are getting a BIK then you need to check it's either on your tax code, that you advise the tax office so it is, or that you do a return.
Not looking for a free lunch
Just to be clear, I didn't intend any criticism - just a comment on the inevitability of taxes !! 🙂
Me too, don't mean it as an individual criticism. Rather that entirely possible the system doesn't ask about Med Ins or other BIKs, but if you don't declare / pay tax on them and use the crap systems as an reason you'll get .... absolutely nowhere.
Another tip that I'm not good at following myself is to get it done as early as possible - I think this gives more payment options, e.g. clawed back through tax code etc rather than a big bill in Jan. Guess what I wish I'd done in May.....
She will be being taxed on the benefit though adjustment to tax code to cover the BIK. Her employer will have informed HMRC of the value and HMRC will have updated the tax code. Easiest check is look at tax code on the payslip. For anyone with no BIK or other income it’s 1257L but for that do it will be a number below 1257 to account for reduction in tax free allowance. The self assessment includes it as not everyone is PAYE
Thanks all, particularly @tonyf1 for the tax code tip. Hopefully when I get home tonight she will tell me that she's spoken to her HR and it's all crystal clear now (ha ha!).
Also she should have a personal tax account (easy to set up if not, NI number) and then she can look at her latest tax code notice to see what she'd got on there.
Even for a relatively simple employee, there's a fair bit that can appear so worth checking - charity donations (regular or one off) professional memberships, etc.
… AND PRIVATE PENSIONS
In some cases, you need to claim tax relief on pension contributions yourself. You’ll need to make a claim if you pay Income Tax at a rate above 20%and your pension provider claims the first 20% for you (relief at source)
https://getpenfold.com/news/claim-higher-rate-pension-tax-relief
Even for a relatively simple employee, there's a fair bit that can appear so worth checking - charity donations (regular or one off) professional memberships, etc
This.
IDK why there’s such a fuss about self-assessment. Sure, some of the completion can be a bit arcane the first time you complete one or need to declare some extra bit but HMRC’s guides are fairly clear and there are a few web resources, including STW 🤣 , to help.
OP, hopefully HR helped. I see my PMI payment on each month’s payslip together with a rolling tally of benefit values and see that it is accounted for in PAYE.
My SO retired early a few years back and just has NHS pension payments as income. Each year since then they’ve filled in self-assessment just as when working. Each year there’s a refund of overpaid tax. Each year HMRC say ‘you don’t need to do self-assessment in the future’. Yeah, right.
I’ve done self-assessment since the revelation back in the 2000s that since I had dividend payments from shares awarded as part of bonus payments I needed to declare this, occult to HMRC, extra income appropriately.
IDK why there’s such a fuss about self-assessment.
Are you kidding - it takes me months.
It takes about 5 mins to remember what my Login details are, or rather where I've hidden them.
2 mins to bring up last year's so I remember what boxes to fill in.
10 mins to go through my bank details on line to spot any extra charity donations made and find out what my RSC subs were. 2 mins to curse myself for not keeping a record of them (it's not hard, I support 3 charities by monthly DD, it's only finding the few where I've been inspired to chuck a few quid in - like WMR story)
5 mins to open up the work PC to get my P11D / P60 on the online system.
10 mins to do the actual return, much of which is waiting for verification codes at submission time.
The months? - is the time spent in prevarication about getting round to it because I'm still convinced it's some sort of god awful faff.
As PGP says, it really isn't very hard at all, and if you have anything other than pay and personal allowance, it is worth the effort to make sure you aren't owed or are running up a future bill when they find out.
In some cases, you need to claim tax relief on pension contributions yourself. You’ll need to make a claim if you pay Income Tax at a rate above 20%and your pension provider claims the first 20% for you (relief at source
this can be backdated as well. I got 6yrs worth back.
HMRC say ‘you don’t need to do self-assessment in the future’. Yeah, right
Agreed! I worked as a PAYE NHS employee essentially all my life. One year HMRC told me no need to bother so I didn't. A few years later I bothered to look at my tax code calc (not sure why) and there was a deduction for TIPS on there. Hadn't heard of TIPS and nor had anyone else at work so I phoned up HMRC and asked. It was the value of tips that I was presumed to have received from grateful patients - admittedly I've enjoyed plenty of free chocs on wards but never had a tip.
Their assumed amount wasn't small so of course I claimed it back but also looked at previous years - the cheeky ****ers had made up a small amount one year and then just doubled it every following year. No doubt in my mind that they wwere trying it on, hoping I'd not notice. Was well over a grand in total. 🤬
Over a grand on the tax paid on the assumed value of tips! Where were you working, the Lindo wing?
If the tax return is submitted before 30 Dec then they do adjust anything owed via tax code subject to the amount owed being less than £3k (not sure of actual £ - it’s in the ballpark).
As you’re getting CB but having to pay it back, near the end of the process there’s the option to have the future years adjusted via tax code too.
Your wife’s employer has to issue her the 25/26 P11d by 06/07/26 which will contain that year’s PHI value.
Never seen a medical insurance as a deduction on payroll unless the ‘ee is paying for spouse/family. As stated above it will be collected via tax code. The P11d will show the benefit value.
Never seen a medical insurance as a deduction on payroll unless the ‘ee is paying for spouse/family
My tax code isn't adjusted. The taxable value of my monthly premium appears on my payslip and my take home salary is adjusted accordingly. Single cover only, paid by my employer
it is worth the effort to make sure you aren't [...] running up a future bill when they find out
It is indeed, but it can be a bit stressful working out how to declare stuff that is not just pay. Many moons ago (like decades) I received some BOGOF shares from my employer - not a lot, I'm not a high roller! - but I was young(ish) and carefree and didn't keep proper records, so at this point it's a bugger to decide what to do when I sell them.
Nothing unless you have gone over CGT thresholds, and as long as you've had them for more than 5 years. That's £3k annual, not sure how many years you can include.
You can avoid CGT too if you trf to eg a pension rather than take as cash
Depending how much you have, if you're above these limits pa worth asking someone properly