Employers considering providing private medical insurance (PMI) as a new employee benefit would be wise to do so before November 2015. This increase in tax cannot be avoided but taking action now will delay the impact for another year.
Employers considering expanding an existing PMI scheme would be sensible to do so immediately and definitely before November 2015. Insurance providers will still be trying to establish what impact the new 9.5 per cent charge will have on premiums paid after November.
If employers currently provide PMI for a large number of people where the scheme is influenced by their own claims experience, then they may do well to consider setting up a healthcare trust. Among other benefits, healthcare trusts do not attract IPT.
Another innovative way to reduce IPT is via a corporate level deductible (or excess) that is equivalent to all or most of the claims fund.
Matthew Judge, technical director at Jelf Employee Benefits, said: “The message we want to convey is that it is important to act now. There are a number of options available for employers to reduce the IPT burden; some of them may sound complicated – because it might be a different way of working – but they’re not, and, of course, we’re here to help.”
When IPT was first introduced it was set at a flat rate of 2.5 per cent, but it was increased on general insurance products to four per cent in 1997 to five per cent in 1999 and six per cent from January 2011. Jelf Employee Benefits advises that the recent budget announcement that IPT in the UK will rise by 58 per cent from six per cent to 9.5 per cent will require some serious thought, particularly in the provision of medical insurance benefits.
The current level of IPT in the UK has remained relatively low at six per cent when compared with mainland Europe, where average IPT levels have been around 10 per cent, although taxation on healthcare insurance policies in some countries is treated differently. Jelf is urging employers to talk to healthcare specialists as soon as possible.
Jelf can be contacted on 01425 481556 or on [email protected].