Benefits in kind query

[Tabitha005]

Hi everyone, can anyone offer a quick answer to an issue I've just discovered with my tax?

I had private medical cover with my previous employer which meant my tax free allowance was reduced by £3908 a year.

I left this employer two years ago, and chose not to take the private medical cover offered by my current employer. However, I've just discovered (through signing up for the 'Government Gateway' facility and checking my income tax online) that for the past two years, my tax free allowance has still been reduced by £3908 a year, and that HMRC still think I'm receiving the private medical cover as a benefit in kind.

I used the online facility to tell HMRC that I haven't had employer's medical cover as a benefit for the past two years and they've confirmed today that my tax code has now been updated.

Can anyone tell me how the 'tax'/'money' due back to me will take effect, and roughly how much it might be? I'm a higher rate tax payer if this makes any difference.

Thank you.

Your personal allowance for 20/21 will have increased by circa £8k. Assuming that you are comfortably into the higher tax bracket, this is £8k that you pay 0% tax on instead of 40% tax - a tax saving for the year of £3.2k. Assuming also that the change in tax code comes too late for your employer to apply it to your February payslip, the tax you pay in your March payslip will be reduced by £3.2k (so March will be a bumper payslip!). Because March is the final month of the tax year, if you aren’t due to pay this much tax, your tax code next year may also need to be amended - you should check your 20/21 tax calculation after March to see whether you or not you recovered the full reduction

This also assumes that you were comfortably in the higher tax bracket whilst you were paying tax on the benefit in kind. Your tax code should have increased by around 800 (e.g. from 1250L to 2050L) if this is the case

Thanks so much, 2thumbs, your advice and explanation is really helpful - I appreciate you taking the time to reply.

No worries - I’ve just dealt with an almost identical situation myself. I received my refund via cheque but due to lockdown and WFH it’s just been sat on my desk looking at me for a couple of months now - I’ve no bank branch nearby so am going to have to commute to the office for one day soon just to pay it in!

Can you pay it in at the Post Office? I've done that a couple of times. Alternatively, I just post cheques to my branch and ask them to pay it in!