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HMRC internal manual

Employment Income Manual

Tax treatment of insurance agents: discounted premiums or price

Where, in connection with his or her own policy or purchase, an employee pays a discounted premium or price to an employer, a benefit under Section 201 ITEPA 2003 must be considered (see generally EIM21001 onwards). Any benefit is deemed, in the circumstances, to arise by reason of his or her employment (Section 201(3), see EIM20502) and its measure is the amount by which the cost of providing it exceeds the actual premium or price paid.

Where an employee arranges for the acquisition of goods, services or investments for an unconnected third party who pays a discounted premium or price and no money or money’s worth or benefit is received by the employee (or by a member of his or her family or household) there is no tax liability. There may, however, be a tax liability under Section 201, if for 2015/16 and earlier the employee is not in an excluded employment (see EIM20007) and the employee or a member of his or her family or household is provided with any benefit. In these circumstances there will always be a tax charge where the benefit is provided by the employer. But where it is provided by anyone else the charge will depend on whether the benefit is provided by reason of the employment. The measure will be the cost of providing the benefit with no account taken of the premium paid.