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This scheme provides a replacement of income to the employees in the event of long-term sickness or disability.
There is a waiting period (called the deferred period) before the benefits commence which again the Company would choose.
The company would pay the premiums.
The taxation
of these types of schemes is as follows :
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Employer
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Premiums allowable as a business expense and any claims paid to the employer are treated as a trading receipt. The payment of the benefit by the employer to the employee is treated as an allowable business expense so the overall tax position to the employer is neutral.
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Employees
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Not classed as a benefit in kind but benefit, once paid, would be taxed through the payroll system. |
The cost will vary between 0.75% and 2% p.a. of payroll depending on the deferred period and the level of benefits selected. At the upper end of the cost range, this would include the employer covering his national insurance contributions and any pension contributions he was making. At the lower end of the cost range, this would be to provide a straightforward income replacement plan of about 50% of salary with a three month deferred period. Actual costs will be dependent on the age range of employees and particularly their occupations.
At Manaton we can advise on these areas and can offer employers the benefit of independent advice in choosing the best schemes for them.
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The FSA does not regulate some forms of tax planning
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Authorised and regulated by the Financial Services Authority. Manaton Associates Ltd is entered on the FSA register (www.fsa.gov.uk/register) under reference 455416.
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Site last updated:April 2010 |
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MANATON
ASSOCIATES LTD.
Southbridge House, Southbridge Place, Croydon, Surrey CR0 4HA
Tel: 020 8240 6522 Fax: 020 8240 6523
E mail: enquiries@manatonassociates.co.uk
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