Benefit in kind - is it added to tax

[TidyHelper]

Been told my company will pay for private medical insurance. They say annual premium is £1,200.
They also said I can have private dental insurance with premium being £500.
If my salary is 97k do I add on the extra £1700 in terms of tax? Guessing I pay 40% of £1700?

From memory, the payments for health insurance etc comes out after tax is paid on the salary (less any pension contributions)

Yes you basically get an extra £1700 added to your tax code so you pay tax on £1700 at your marginal rate which would be 40%.

You won’t based in those figures but make sure you don’t end up going over £100k as there is an effective marginal rate of 60% as you lose personal allowance over £100k. You would also lose tax free childcare if over £100k if that’s relevant

Why would that be the case its benefitin kind?

Thanks do they put you on new tax code

it depends on how your company are currently dealing with benefits in kind. There is a new system coming in called payrolling where the Employer will collect the tax through the payroll during the year by including your benefit in kind, in this case your paye code isn’t adjusted. The old way that many are still using is that the benefit in kind is reported to hmrc after the year end on your p11d . You would then end up with an underpayment the first year which hmrc would collect through your tax code in next year, they would also amend your tax code to include an estimate to collect tax on bik for current year based on prior year p11d. You can avoid underpaying in the first year by informing hmrc of the benefit in mind when it first starts through your online account.

Yes you definitely should get a new tax code but I don’t know how quickly you get one. I’m paying off a small debt to HMRC as my tax code didn’t update quickly enough when the health insurance started

Guessing they minus cost of premium from £12570??

Thanks so should I ring them and just tell them cost of premium?

It won’t update automatically unless you tell them, it’s only after the tax year when fhe employer files the p11d that hmrc are informed

You can do it by phone if you’ve got a spare hour to wait for them to answer or through your online account which is quicker if you are able to do