NHS Surcharge Costs

13 November 2015

HMRC has recently been asked to reconsider its view on the treatment of NHS surcharges paid by employers on behalf of employees for tax and NICs purposes.

Because the surcharge must be paid upfront and is part of the VISA process, HMRC has decided that the costs of the NHS surcharge may be attached to the VISA costs and be regarded as a travel facility in the same manner as the airfares, train fares, etc. As such, where the costs can be attributed to a particular journey from overseas to the UK, a deduction will be appropriate for the employee under S370 or S373 ITEPA 2003 and for the accompanying or visiting spouse, civil partner and children under S371 or S374 ITEPA 2003.

Similarly such costs are therefore disregarded for both Class 1 and Class 1A NICs. Where however there is no journey for example because the cost relates to an extension to allow the employee to stay in the UK, the costs met by the employer will be general earnings and liable to tax and NICs.

The CIPP represent members and the payroll profession at the Joint Forum on Expatriate Tax and National Insurance Contributions and the most recent minutes of the meeting held on 25 August 2015 have been published at GOV.UK. The joint forum is a sub group of the Employment and Payroll Group.