Taxable benefit and child benefit threshold

[Annie232]

On the back of another thread regarding child benefit. It seems really unfair that taxable benefits such as medical insurance etc is added in to the income calculation for child benefit.

We have benefit in kind ‘income’ of £10k for medical and dental insurance, which puts us over the threshold for cb, this seems really unfair as it’s not actually income that we receive that we can spend. Anyone else in the same
boat and think this is unfair? Seems like the only way round is to add more to our pensions.

Why is it unfair? The money I pay out of my wages for my private dentist, my insurance policies, my private medical treatment is counted in my income figure, it’s really no different

I see your point. Just seems a bit unfair as it isn’t really ‘income’

It is unfair. You are already reducing the burden on the crumbling NHS by getting this through your employer. So then to lose out on Child benefit feels unfair. But on MN, if you are self sufficient or a net contributor, you are the devil and must be rinsed even more. If you are on benefits on the other hand, you are salt of the earth and can do no wrong always reasonable.

It needs to be fair across the board though which is why some things are exempt eg pension. If something is a benefit to you provided by the employer as payment for work then it’s income. If something is exempt it needs to be exempt whether you pay for it or your employer does. In this case it wouldn’t be exempt if you paid for your own health insurance. I guess it’s fair to say that it would be fairer of the employer to offer this on a salary sacrifice basis so that you could choose salary or insurance as they’re effectively forcing you to take part
of your income as health insurance.

True about taking the burden from nhs.

I don't know how it works. Are you able to opt out of these insurances? If so, yabu as I don't get to deduct them from my post tax income when I buy them myself. If it's compulsory it does sound a bit unfair.

The reason you get taxed on those things is that they are regarded as being as good as money. You are getting the income and spending it in a single transaction. If you don't think the benefits are worth it, you can probably opt out.

Can you not opt for extra salary instead of the benefits?

I’d rather take a £10k increase in salary than the medical insurance to be honest.

I had a company car which took me over. So annoying, it really wasn’t as if it cost £11k a year! Also paid company car tax.

employer doesn’t offer this

I get that, but having medical insurance isn’t the same as cold hard cash, I can’t pay my bills with medical insurance.

Grossed up pension contributions or gift aid donations reduce your effective net income for child benefit purposes. And gross up your basic rate band, so you pay 20% on more of your income than 40%. I don’t think it’s unfair that your benefits are added to your salary, but I do think it’s unfair higher earners lose out on childcare hours. Especially as the £100k limit hasn’t changed for a number of years, so more people will gradually get caught by it.

So annoying, it really wasn’t as if it cost £11k a year

If you take depreciation, cost of finance, insurance, running costs on a brand new car you may get close to £900 a month. It depends on the car value and if you had fuel card.

I have in the past turned down these employee benefits including health insurance and company car because the tax paid on them made them too expensive. For comparison, I am paying £75 per month for health insurance for my family of four. You'll be paying more in tax for the insurance provided by your employer.

I’d be amazed if you can’t opt out of the health insurance - have you checked with your employer?

there’s quite a lot more you can add to bring the ’ headline’ fight down. Gift aid if you sneak over the higher rate, work at home allowance and your pension contributions again if you are a higher rate tax payer

Yes can opt out, but they won’t give the cash equivalent instead.

Just opt out then. How much are they claiming it is worth? My private health insurance is under £1k a year, nowhere near £10k.

And that's medical plus dental!

That's a lot of benefit!
My private medical is around £500pa BIK.

just googled an an average for a whole family is under £2k a year. You probably pay more in tax alone than other people pay for the premium!

Well then just opt out if it’s such an inconvenience to you. Of course it’s similar to income, it saves you spending your income on those thing.
If your dental bill was £800 and your insurance paid got back £650 that’s as good as cash.
If you don’t use them you can obviously ask your employer to stop the benefit but it’s paid bills that other people don’t have. Hence why it’s included in the cap.