Whether or not Ed Miliband used the word “weaponise” to describe his party’s strategy of fighting on the issue of the NHS in the run-up to the general election (he says he “can’t remember”), one thing is for sure, the NHS will form one of the main battle lines in the 2015 general election. By Soraya Chamberlain, Head of Healthcare Consulting, PSHPC
It is surprising, then, that none of the political parties has seized on the idea of reducing UK taxation levels on corporate private medical insurance (PMI), arguably the highest in Europe, to enable more employers to offer their staff privately funded medical treatment which would help relieve the pressure on the NHS.
Taxation levels are one of the reasons UK PMI has not grown in terms of population insured for at least five years, and many reports state the market is actually reducing. This is curious given that more people are working in the UK than ever before. The current tax situation is that for a high rate tax payer (45 percent marginal tax) enjoying ‘family cover’ costing their employer £1,500 per annum the tax rate is a shocking 64 percent.
This breaks down as follows:
£1,500 x 45 percent = £675
Insurance Tax at 6 percent = £90
Employers NI at 13.8 percent = £207
As things stand, HMRC generates £973 in tax as a result of an employer paying £1,500 to help an employee not put further pressure on the NHS. Not only is the taxation on corporate PMI too high, it is not competing on a level playing field with other employee benefits. Group life assurance premiums, for example, are not a benefit in kind and no insurance tax or employer’s NI applies (in fact members can often gain tax relief). Surely the government should encourage employers to look after their staff by not only paying them fairly and providing safe and secure employment, but also by supporting their health, wellbeing and productivity? As economic conditions improve, as they are doing, then surely now is the time to support employers that invest in their staff.