Medical Claim Reimbursements through Payroll?

Sbecerra · PayPerShop Newbie Joined: 14 Apr 2008 Posts: 1

Hello,

I have just been asked if I can handled claim reimbursements through payroll deductions. I can not find any guidance on this matter. However, the Benefit department will approve the claims and then send them to Payroll to reimburse adding to the employee's net pay. I don't see any tax implications and wondered if there are some concerns with this practice. The Benefit department will be bringing inhouse their customer service area and to some extent their payment of claims. Any guidance on this matter would be greatly appreciated.

Hugo Fair · PayPerShop Member Joined: 22 Jul 2004 Posts: 67

Without knowing a lot more about the "medical claims" it is impossible to give guidance on the Tax/NI implications - irrespective of whether they are paid through Payroll.

In general, it sounds as if you are being asked to include (re-)payment of 'expenses' claims via payroll - in which case the Tax/NI implications will be dependent on whether your organisation has a Dispensation in operation (and, if so, whether Medical Claims are included in it).

If you can show that you are allowed to make such payments free of Tax and NI, then you have no problem (assuming your Payroll has a suitable paycode set up for this).

If not, you will have to decide between making payments via Payroll (but obviously using different suitable paycodes) OR making payments outside of Payroll and reporting them via P11Ds.

As you may be aware, HMRC are currently consulting on whether or not to incorporate part/all of P11Ds within Payroll - so the final option may disappear, but not in the immediate future.

As a start, I would find out how your Benefits department currently handles the Tax/NI implications relating to Medical Claims. This should give you a clue as to how to proceed.