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HMRC internal manual

Employment Income Manual

Particular benefits: medical expenses, treatment and medical insurance: group premiums relate to retired employees

Some employers have a group medical scheme that covers retired employees during the first few years of their retirement. No tax charge under the benefits code can arise on the provision of medical insurance after retirement because a pension is not an employment (see EIM20040).

You should charge to tax as employment or pension income, the expense incurred by the former employer in providing medical insurance if it represents:

  • a specific part of a retired person’s pension, or
  • a supplementary pension or part of an unapproved or employer-financed retirements benefits scheme (see EIM15010 onwards), or
  • part of a termination package chargeable under the provisions of Part 6 Chapter 3 ITEPA 2003 (see EIM13000 onwards).

In the year of retirement it may be necessary to apportion the premium. You can accept any reasonable manner of apportionment.