What Is PMI On My Payslip?
If you are an employee keen to learn about the mention of a PMI or Private Medical Insurance on your payslip, you will find guidance in the following blog post. While we will mainly discuss what a PMI is and why it is mentioned on your payslip, we will also explore whether a PMI is a taxable benefit in kind and if it is so, how will it be accounted for by your employer.
What Is PMI On My Payslip?
The PMI on your payslip is the Private Medical Insurance provided by your employer as a benefit in kind.
PMI is a form of health insurance that covers the cost of short-term medical conditions by employees while providing a controlled cost of healthcare provision to employers and allowing them to avail of corporation tax relief on the amount.
When you see PMI mentioned on your payslip, it means that the following costs are being covered through Private Medical Insurance that is covered by your employer:
- doctor’s consultations
- diagnostic tests
- in-patient and out-patient procedures
A PMI can typically cost an employer between £200 to £1,500 per year, per employee; depending on the following factors:
- employee’s age
- the size of the scheme
- an employer’s claims experience
Being a benefit in kind, PMI is subject to a tax deduction and National Insurance contribution on the premium. This is the reason why your payslip mentions the PMI provided by your employer.
The amount of tax that you will need to pay due to the mention of a PMI on your payslip depends on your total income and the tax code assigned to you. This amount will be automatically deducted when your employer deducts income tax from your earnings under the PAYE system.
The PMI on your payslip will also be mentioned in your P11D form (to be filed by your employer). Employers usually share their employees’ P11D forms with them before submitting them to HMRC.
Is The PMI On My Payslip A Benefit In Kind?
Yes, the PMI mentioned on your payslip is a benefit in kind; also called a fringe benefit. Benefits in kind are usually assets or services that are paid for by employers and used by employees both during and after working hours.
Most benefits in kind are taxable and due for National Insurance contributions. Some common benefits in kind extended by employers include the following:
- Private health insurance
- Company car
- Assets of significant personal use
- Self Assessment fees paid by the company
- Home phones with personal use
- Non-business-related travel expenses
- Non-business-related entertainment expenses
How Is The PMI On My Payslip Accounted For By My Employer?
When an employer extends benefits in kind such as Private Medical Insurance to their employees, it is essential for them to account for them in your P11D form submitted each year to the HMRC.
The cash equivalent amount of your PMI premium is added to your salary which is then mentioned in the P11D form (there is a separate form for each employee).
The declaration of your PMI in the P11D form is your employer’s responsibility which they must fulfil by the 6th date of July to account for the previous tax year. This means that your PMI for 2021/2022 will be mentioned in your P11D form filed by July 6 2023.
The above discussion helps to conclude the meaning and reason for the mention of a PMI on your payslip. PMI is a Private Medical Insurance provided by employers as a taxable benefit in kind to their employees. The amount is added to their salary before income tax and National Insurance contributions are calculated.