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The good news is that private health insurance is tax deductible in the UK.
As long as a company pays for the private medical insurance of an employee or director, the premiums are deductible as business expenses. The company also benefits from tax breaks on these expenses. Those who get private medical insurance will be subject to National Insurance contributions (NI) on their premium. If you are claiming the health insurance policy as part of a business expense, the policy must be paid for through the business bank account.
Employers must submit a P11D tax form to HM Revenue & Customs every year. This is an end-of-year expenses and benefits form which details the salaries and/or wages of employees earning £8500 or more. HM Revenue & Customs also needs a P11D(b) tax form which details the amount of Class 1A National Insurance contributions due on expenses and benefits that you have provided to your employees. If an employee earns more than £8500 annually, they’ll need to pay tax on the amount of benefit received.
As a general rule, taxes do need to be paid on private health insurance plans provided by employers, but personal policies are exempt from taxation. If your employer does pay for your health insurance, you will usually pay a level of tax that relates to the cost of your insurance premiums. The policy is treated as a benefit that is received from employment but not included in your salary or wages.
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If you are not receiving any income it is unlikely that there will be tax implications for you if you have a health insurance policy in place. You can discuss the finer details with an expert or visit the HM Revenue & Customs website.
If you are self employed, you may be eligible to deduct the private health insurance premiums you pay, it can be classed as a business expense and therefore eligible for tax relief.
HM Revenue & Customs taxes private health insurance differently depending on whether it is a personal plan or group health plan that an employer offers.
Private health insurance is an affordable way to bring peace of mind to you or your employees. Recent events have shown that we never know when we will need healthcare. Private health insurance can help pay towards any household bills if you are off work due to illness.
Currently, in 2022, Statutory Sick Pay is £96.35 per week. This is paid by the employer for up to 28 weeks. Some people may be entitled to further benefits, but often they are not the same as a wage/salary. A personal health insurance policy may not only help with paying bills, but also healthcare. Private health insurance is a growing market within the UK, with mental and physical health issues being seen as more important due to recent events. Some private health insurance plans can include your family.
Private health insurance may be a worthwhile investment for employers and individuals. Most health insurance plans cover both mental and physical health issues. Private medical insurance can provide access to private healthcare facilities where you can often receive treatment at a time convenient for you, avoiding any NHS waiting lists.
A lot of private health insurance policies offer access to the latest drugs and treatments, as well as a choice of hospital location and your choice of specialist doctor. Health insurance often covers acute, short term conditions that are curable. Long term conditions are not usually covered, you will need to check the finer details with your private health insurance provider. There are different policies covering different treatments. Some health insurers offer add-ons that may be of benefit.
Any claims made on private health insurance policies are usually settled directly with hospitals or other care providers. You may receive a small payment directly, maybe if you have had to stay in hospital, this may not be taxed.
Some benefits do not need to be reported to HM Revenues & Customs and are not subject to tax or National Insurance. Some of these may include one medical check or health screening per year. Eye tests may also be exempt if they are required by health and safety legislation for employees who use a computer monitor or other screen, this also applies to glasses if you have to provide them. Medical treatment outside the UK is exempt if your employee is working for you overseas and needs treatment. There is a condition that you must have committed in advance to pay, unless you arrange and pay the provider directly for your employee’s treatment or insurance.
If your employee needs medical treatment to help them return to work, this may be tax exempt. If you pay up to £500 for the costs for an employee to return to work. The employee must have either; been assessed by a healthcare professional as unfit for work (or will be unfit for work) because of injury or ill health for at least 28 consecutive days, or have been absent from work because of injury or ill health for at least 28 consecutive days.
The most tax-efficient way of buying health insurance depends on your circumstances. Speaking to an independent accountant or tax adviser, or HM Revenue & Customs may be able to help you make a decision on your private health insurance.
The forms that you will need to fill out to start claiming back any taxes can be found on the government website https://www.gov.uk/tax-company-benefits/other-company-benefits-youll-pay-tax-on