Shadow Health Secretary Liam Fox's recent announcement of plans to scrap the additional National Ins...
Shadow Health Secretary Liam Fox's recent announcement of plans to scrap the additional National Insurance (NI) charged to employers, as well as a proposal to abolish the benefit in kind tax on employees, has yet again set the political ping-pong game surrounding private medical insurance (PMI) going again.
While any tax advantage is of assistance, the imposition of the additional NI of around 12% has had little negative effect, with most employers realising the real value of PMI and, albeit grudgingly, accepting the situation. It has been said that as it is the employers who actually pay the premiums, the abolition of tax on employees would have a minimal effect on business levels. But when one considers the vast numbers of small schemes, family firms, partnerships and those small businesses only covering a few key staff, I believe that such a move would be more apparent and have a more significant impact.
Over the years, we have experienced numerous disadvantages imposed by the Treasury on private healthcare, almost certainly without which would have increased new business sales and retention of existing cover, somewhat ironically reducing the burden on the NHS. Many believe that the same doctrine of not imposing VAT on certain politically sensitive items should apply to those making provision for their own healthcare and that of their employees, therefore this should apply to the application of IPT and income tax.
Rather than attempting to score political points, a holistic approach to healthcare is long overdue. Dialogue should be instigated by the Government without delay between the relevant parties to improve the definition of the role and appropriate benefits of PMI to further complement the NHS, rather than on the forehand patronise and on the backhand disadvantage the PMI industry.
Structured properly and working with the NHS, the whole ball game could be more efficient, leading to reduced premiums with lower inflation and affordability of further tax breaks available to both corporate and individual purchasers. All company-sponsored PMI should be an allowable business expense and, like independent pension provision, the purchase of PMI benefits to find 'non-urgent' procedures should be positively encouraged.
The fact is that corporate PMI is one of the most valued benefits, from the viewpoints of both the employer and the employee. Why? Because it allows people to have more control of their most important asset their health. In the competitive world of commerce it therefore attracts and retains the best staff. Morale is higher and absenteeism is reduced. In the real world, PMI already makes British business more efficient and relieves the NHS. With a bit more intelligent input and a bit less political nonsense, we could have a winner.
