It may well be a discretionary insurance and I can see where the inland revenue comes from to regard it as such. However, I still feel it is unreasonable to expect a company provided scheme to be taxed in this way. This will cost pilots in my airline from between £700 per year for younger pilots to as much as £3500 per year for over 55s!
Consider these arguments as a few amongst many:
1. An airline pilot can lose his medical certificate very easily. He or she can often be grounded without an income – whilst still relatively fit and find it very difficult to find suitable employment. Whilst the general public regard an airline pilot as an intelligent individual, it is, in fact, a very difficult challenge for us to gain useful employment if we cannot continue with our career. He or she rarely has other qualifications or experience in other fields and they are extremely unlikely to gain employment at a similar salary level. Prospective employers are unlikely to offer them less paid positions as they may deem them overqualified or too intimidating to their junior management. At the time of career loss he or she may be well into our forties or fifties and therefore unappealing to a prospective employer to begin an alternative career. Therefore, an airline pilot would be very lucky to gain employment with greater than 30% of his or her previous salary. Therefore, an airline pilot can encounter considerable hardship in the event of loss of flying licence. He or she would unfairly encounter this hardship after paying a considerable amount in tax throughout his or her career he or she has just lost against his or her wishes.
2. Most airline pilots have spent many years developing their careers at great expense to themselves. Due to the nature of flight training and the time involved there is rarely an outlet for tax relief or subsidy to assist them. VAT is charged on flight training and an individual has no means of claiming this back at any point. The average cost to an individual to get the basic qualifications required to become an airline pilot – taking into consideration training costs and VAT, loss of earnings during training and interest on loans is around £100,000. We have never had this rebated at any point and from our first day of work as a pilot have paid tax at the full rates.
3. There is also a safety link. You must consider that If a pilot is under threat of hardship if he or she loses his or her licence he or she is far less likely to visit his or her doctor with a concern about his or her health. Believe me that this does indeed happen when pilots are not covered!
Therefore, whilst being discretionary, I believe that, good quality, loss of flying licence insurance is vital in the pursuit of the occupation of an airline pilot and is solely used for this career. Therefore, to view this as a benefit in kind is very questionable and prohibitively expensive - and therefore unreasonable.