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Medical Benefit Refunds

HMRC are urging employers who provide medical benefits to their employees to engage with the medical benefit companies as soon as possible where refunds are due for 2020/21.  This is because employers are due to report these benefits on form P11D by 6 July 2021. 

Where the medical benefits have been reported through Payrolling Benefits in Kind and the taxable value has changed due to a refund, employers must adjust the taxable value by way of an amended Full Payment Submission (FPS).  The reportable value of the benefit in kind is the cost to the employer less any refund which relates to that tax year regardless of when the refund was received.

In addition to amending the FPS, employers will also need to enter the correct value on the P11D(b) as an adjustment and for Class 1A NIC purposes.

A reminder:

With effect from 6 April 2021 all employers who are payrolling benefits in kind must be registered to do so as informal arrangements which have existed in some instances for years have ceased.

Unfortunately, the deadline for registering for 2021/22 was 5 April 2021.  Although once registration has been accepted it is not necessary to register for each subsequent year.  If an employer is not currently registered and has been taxing the benefits in kind through the payroll, they will be required to complete a form P11D for each employee affected.  The deadline for submission for 2021/22 is 6 July 2022.

Where the benefits have been taxed via the payroll this tax year, then the amount of the benefit that has been taxed can be shown on the P11D in the box marked “Amount made good from which tax was deducted”.

You can find more information on payrolling benefits in kind here.

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