Compare Business Healthcover
Is employer health insurance tax deductible in the UK?
Outline of UK tax treatment of employer-paid group PMI: corporation tax, P11D benefit in kind, and why directors should confirm with an accountant. Not tax advice.
For most UK limited companies, employer-paid group private medical insurance is treated as an allowable business expense for corporation tax, while employees (including directors who are employees) usually have a taxable benefit in kind reported on form P11D. This is a general outline, not tax advice. HMRC rules and your facts decide the outcome — use an accountant.
Company (corporation tax)
Premiums paid wholly and exclusively for the purposes of the trade are commonly deducted as a staff cost. If cover is really a shareholder perk with no employment, HMRC may take a different view. Keep invoices in the company name and match membership to people who work in the business.
Employees (benefit in kind)
PMI provided by reason of employment is typically a taxable benefit. The taxable amount is usually related to the cost of providing the benefit. Payroll / P11D processes should be set up before the first renewal, not after a random HMRC letter. Salary-sacrifice arrangements have extra National Insurance and optional remuneration rules — do not improvise those.
What we will not do
Compare Business Healthcover will not calculate your P11D values or sign off your tax return. Brokers can explain how insurers invoice. Your accountant owns the tax treatment. If a page on the internet conflicts with your adviser, follow the adviser.
Frequently asked questions
Does the employee pay tax on the whole premium?
They are taxed on the benefit in kind as HMRC requires, which is related to the cost of cover provided to them — not always a simple “premium divided by headcount” if dependants and directors are mixed. Ask payroll.
Related: Director cover · SME guide