The Association of Medical Insurance Intermediaries has attacked George Osborne for missing a great opportunity to remove the unfair and inconsistent tax that is the Class 1A National Insurance charge on employer paid private medical insurance.
The previous Labour administration introduced the Employers National Insurance charge on employer-paid private medical insurance, which is due to increase to 13.8 per cent from April this year and comes on top of the 1 per cent rise in Insurance Premium Tax to 6 per cent from January 2011.
In addition, employees are also taxed on the cost of this benefit, as a P11D benefit-in-kind, at their marginal rate of tax. These tax charges are not applied to other group risk health insurance benefits, such as group income protection and group critical illness or on health prevention benefits such as employee health screening, making it so unfair.
Michael Payne, general secretary of AMII says: “When NHS budgets are being squeezed, and the Government wants individuals to take more responsibility for their own health, the Chancellor could have removed the National Insurance charge on employer-paid private medical insurance.”