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Permanent Health Insurance


David
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I am in receipt of payments made under a UK Permanent Health Insurance, or Personal Income Protection, which are paid monthly into a UK bank account.

This was a privately funded insurance, and as such is tax free in UK.

Do I have to declare this in France, and if so which box should I declare it in?

I am presently declaring this in form 2047-K, and in form 2042-K.

 

On a separate matter I have a sum pre-entered in form 2042-K, page 4, top line in the box to the left of box DE.  What does this amount represent please.

 

Very many thanks in anticipation,

David

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For clarity I should say that my injury was a non work related injury, which nevertheless prevented me from working.  I was also not employed by the government, but was a self employed marine surveyor.

Thus I do not think that it could be classed as a "pension accident du travail", but I live in hope that I need not declare it at all.

Any advice gratefully received.

David

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[quote user="lacote0_0"]David

I am sending you a PM.
[/quote]

Many thanks for the kind thought of sending me a PM, unfortunately it has not come through the system so I have not been able to read it.

David

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[quote user="lacote0_0"]If my understanding is correct, in the UK it's considered not to be income, but insurance.[/quote]But you're in France [:'(]

Pause for a moment to remember what PHI is - an insurance which provides an INCOME if you are unable to work through illness.

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Ernie and Bob T,

How does that compare with the following comment on the "Injury Pension" thread?

Quote

I have been here 16yrs and have an ill-health and injury pension from the fire service.  You are not required to declare the injury pension in France .(here it is known as a"pension accident du travail" and is exempted by Code General des Impots,art.81-8°).   If you have documentation showing disability of 40% or more ,you can get an extra demi-part on your quotient which will reduce any tax due in France. You will need to have the paperwork officially translated and ensure that the key words--"accident (or maladie) du travail, and more than 40% " are clearly stated.

Unquote

David

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Seems quite simple "pension accident du travail" = a pension resulting from a work related accident or injury, the equivalent of what many UK police officers, firemen, and teachers, manage to retire on at 50 odd on grounds of disability [Www]

You have stated that your injury or illness was non work related so I see no comparison to make.

I think the word 'pension' is the pivotal point and as I said PHI merely replaces lost income so whilst it may have the same financial effect on it's recipient it is not a pension in the accepted meaning of the word.

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Thanks for your helpful reply Ernie.  I wonder if you would bear with me for a little longer?  I do tend to be a little dim on financial matters, and I genuinely do not understand.

I have declared my PHI for French tax assessment, so I am not trying to avoid tax, but I would like to understand the difference between a workplace accident pension not being assessed and PHI being assessed

As I understand it, you are suggesting that PHI is fundamentally different from a workplace accident pension, OK I am sure that you are correct, but why?

If my PHI was paid for a workplace accident (which it was initially until a greater nonworkplace accident took precedence - I could actually revert to calling it a workplace accident as I am still unfit for work due to that initial workplace accident alone), then it seems that PHI would still be assessed for tax because it is called an insurance which gives income, rather than a pension which gives income.

It seems to me that the only difference is the name, and that the end result of a civil service workplace accident pension, and a private PHI illness and accident policy are exactly the same.  So why is one tax assessed, and the other not?

It seems even worse to me as I paid the PHI insurance premiums myself wholly from tax paid income, with no employers contribution, and no tax allowance.  I do not know, but I doubt if that applies to police, firemen, teachers etc.?

So why do they get it tax free, and I don't?

Confused,

David

 

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David, I don't know the total in's and out's of it but for a start I do think you need to forget any notion of fairness just because you voluntarily paid for your PHI out of taxed income, unfortunately it doesn't work like that !

A great deal of how these sort of payments are treated depends on their source. In the case of public service/government pensions the UK will not pay them tax free, partly because payments into them are made tax free, but also because the tax levied returns to the public purse and doesn't disappear offshore where it would be lost to them forever.

Your PHI income is paid gross because your insurer has no ways or means to deduct tax but that does not mean that it is tax free. You might console yourself with the fact that you will almost certainly pay less tax in France then you would in UK so in some measure you could actually end up better off than those who are taxed at source in UK [;-)]

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To answer the second part of the original post:  The amount in box DE is the allowable amount (as a deduction) of the previous years CSG paid.  It will have been shown on the CSG statement last year.

Can't help about the PHI - sorry

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[quote user="ErnieY"]

Your PHI income is paid gross because your insurer has no ways or means to deduct tax but that does not mean that it is tax free. You might console yourself with the fact that you will almost certainly pay less tax in France then you would in UK so in some measure you could actually end up better off than those who are taxed at source in UK [;-)]

[/quote]

With respect, PHI payments to a UK taxpayer are not subject to tax of any sort. So the distinction to be made is between the amount received in the UK, without tax, and the amount remaining after any tax due has been deducted in France.

The policy insures against loss of the capacity ("permanent health") to work, for whatever reason, and whether or not caused by work. In practice this is done by making regular payments, but this does not mean that those payments are a pension (and typically, payments will cease when the insured reaches pension age).

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I'm finding this thread really fascinating, even though I cannot answer the question (sorry.)  I have recently been the subject -as many know - of an accident which has rendered me partially handicapped.  As a result, a claim is being made against the insurance company of the person responsible for said accident.  I may well get a lump sum; I may well also be paid a certain amount each month towards living expenses - as yet I do not know exactly.  When I asked on this forum if any money I received would be taxable, I was told (by  a well respected member of this forum) that no, it was not taxable.  To my mind, David's case is rather similar in that he is being paid for an injury not sustained at work, but certainly affecting his ability to work (and possibly to do other things also.)  Just because it was his insurance policy and not that of a third party, and that it is English, I'm not convinced that it would be treated any differently.

I'd be inclined to talk to an insurance broker or other expert and find out if payment made from a personal accident policy (such as many French companies issue) is taxable or not.  I can't believe there's a difference be the policy French or English, but the next step then would be to establish this with your tax office, David.  Well, that's what I would do in your shoes....

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Hi lacoteO_O (do you have an easier name to refer to you please?)

I am afraid that I did not receive your PM, thus no reply from me, but thanks anyway.

You are entirely correct in your post.  PHI payments are not subject to UK tax of any sort.

You are also correct to say that PHI payments cease when the insured reaches pension age.  I wonder if this is the same for firemen, teachers, policemen, etc. for their work related injury/illness payments.?

I confess that I am somewhat baffled, and am not convinced that PHI should be assessed for tax in France.  I have now submitted my French tax forms, so it is too late for this year, but I would really like to undersatnd the concept of why it is tax free in UK, but not in France. In these difficult times the difference could mean us returning to UK.

David

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Thanks for your post Coops, how are you keeping now?

I agree with your post, but before I go to my local tax office, I would like to understand a lot more about the matter, and preferably have some official documents to quote.  I have tried local insurance brokers, and they say that PHI does not exist in France, therefore there is no box on the tax form for it, therefore it is classed as income, therefore I must pay tax on it.  This does not seem correct to me.  Could PHI be described as a tax free pension in an existing box on the French tax forms I wonder?

David

 

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David

I've sent you a new email.

I agree taht there doesn't appear to be an obvious equivalent to PHI in France.

If the PHI is to be considered as a pension de prevoyance for a maladie de travail, then I think that the most that it entitles you to is a reduction (abattement) of 10 or 20% in your tax, up to a maximum of the plafond de la securite sociale. See http://ec.europa.eu/employment_social/missoc/2001/f_part5_fr.htm,

http://www.securite-sociale.fr/chiffres/baremes/plafond.htm

Part of this ceiling is made up of a carer's allowance, which may not

apply in your case.

Shall be very interested to hear how you get on.

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Well, David, PHI does exist, and must exist, as it is now obligatory for newcomers from other European countries.  I have a personal injury policy attached to my house insurance, in case I have an accident at home.  My car insurance covers me in case I hurt somebody (as somebody did to me).  Is tax payable on any payments made under these policies?- I doubt it.  Of course private insurance exists, even if this particular type of policy does not.  Not every insurance company which offers personal injury policies is a mutuelle, is it?

It's very interesting because if it's taxable, then why aren't the top-up payments that almost every Frenchman (and a number of immigrants) get back from their complementaires?  If you damage your car in an accident and are paid for it, should you declare this as income?  I don't think so.  But of course,  I don't actually know.

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The taxation rules for accident lump sums and subsequent regular payments are explained in this [url=http://www.moteurline.apf.asso.fr/References/JuridiqueAPF/2009_Cir%20114%20NJ%20Le%20devenir%20indemnit%E9s%20moteurline.pdf]Judicial Guidance Note[/url] published by the Association des Paralysés de France.

In brief, lump sum awards are not regarded as revenue and are not subject to income tax. Nor are they subject to wealth tax although if they (and any assets purchased using the money) exceed the threshold, then they are declared but offset by allowances corresponding to the amount of the original award. On the other hand, sums paid to a third party to an insurance contract following the death of the policyholder as taxable as they are considered to be a contract payment rather than an indemnity.

Regular payments (rentes) are regarded as income and are therefore subject to income tax, with the following exceptions:

- payments made as a result of an accident de travail or maladie professionnelle;

- payments resulting from a judicial award of damages for a victim suffering a total permanent incapacity which obliges them to have third party assistance for ordinary acts of life.

- payments received through 'amiable' settlements by insurers under the Loi Bandinter (road traffic accident injuries) as per Cooperlola's situation.

Perhaps this might help to clarify things for some people.

 

 

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SD,

Does that mean that a PHI paid out for an accident de travail or maladie professionelle is not subject to income tax?

Unfortunately PHI do not consider the cause of the accident or illness (other than self inflicted), only the resulting unfitness for work.

David

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David

Compensation for accidents de travail and maladies professionelles is exempt from taxation as it is delivered through the social security system.  Compensation through a commercial insurance policy is a different matter and would appear to fall outside the scope of the exemption.

 

 

 

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