Is private health insurance tax deductible in the UK?

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With the previously unthinkable public health crisis that has unfolded in the UK and around the world over recent months, preparing for the unknown has perhaps never seemed more important. At Heath Crawford we specialise in ensuring lasting peace of mind with a wide range of insurance products. 

For many businesses in the UK, private health insurance has long been a highly worthwhile investment, and notwithstanding recent changes under specific providers due to the Covid-19 pandemic, it continues to be a sensible option in the long term. However, as is so often the case with questions around HMRC, there tends to be some confusion over exactly what the tax implications of a private medical insurance policy are.

What is private health insurance?

Broadly speaking, private health insurance is any insurance policy that covers the cost of medical treatments. Varying levels of cover are offered in a wide range of insurance policies, and the corresponding premiums reflect different types of treatment and other likely costs.

What does private health insurance cover?

A standard private health insurance policy covers the cost of inpatient and outpatient treatments at private hospitals, as well as accommodation, nursing care and any medication which is prescribed.

On top of this, you can choose to add additional cover to your insurance policy for specific features such as:

  • Private ambulances
  • Accomodation for parents where a child is in hospital
  • Home care
  • Psychiatric treatments
  • Complementary therapies
  • 24-hour helpline access

Why is private health insurance a good investment for businesses?

Private health insurance policies for employees prove to be an excellent investment for many types of business. Offering private healthcare to employees ensures that they have swift access to high-quality treatment in the event of an illness or injury, meaning fewer days off work, higher levels of productivity and greater financial savings in the long run.

In addition, private health insurance is a highly attractive benefit for prospective employees during the recruitment process. In workplace cultures that increasingly value wellness and work-life balance, non-financial incentives such as these can cause somebody to accept one job over another – meaning that a benefit like private health insurance can help you to recruit and retain the best talent in your industry. 

Does private health insurance need to be reported to HMRC?

At the end of the financial year, you will need to fill out a P11D form (known as an ‘expenses and benefits form’ for each of your employees. This itemises any benefits that they have received from your business in addition to their salary, and health insurance must be included in this if it has been provided.

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Is private health insurance tax deductible in the UK?

Where private health insurance is provided to employees, it is considered a ‘benefit in kind’. This means that in most cases private health insurance is not tax deductible, and employees need to pay tax on any insurance premiums as reported in the P11D. 

However, there are a number of specific circumstances where this is not the case. For example, in a small unincorporated business, private health insurance may be considered a valid business expense. You should check with your specific insurance provider if you believe that your company may be eligible for an exemption such as this.

How is private health insurance taxed in the UK?

Generally speaking, only expenses which can be classed wholly as business expenses are tax deductible in the UK, meaning that in most cases private health insurance is not.

However, there are certain tax-free health benefits which can be provided to employees, such as:

  • Annual health check-ups
  • Eye tests for employees working at screens
  • Costs of medical insurance when working abroad

I am self-employed. Do I need private health insurance?

Private health insurance is a worthwhile investment not just for businesses with multiple employees. If you are self-employed and become ill, you will have to rely on SSP (statutory sick pay) to cover lost earnings. This puts you under pressure to get back to work as soon as possible, and a private health insurance policy allows you quick access to treatment and ensures that you will be back on your feet sooner.

Is private health insurance tax deductible for self-employed people in the UK?

If you are self-employed and health insurance is in place to help you get back to work as soon as possible, you may be able to classify your insurance premiums as a business expense, potentially resulting in a valuable tax break. You should speak directly to your insurance provider to find out if this is possible.

Ask us about private health insurance

If you are interested in a private health insurance policy or have questions, please do not hesitate to get in touch by emailing or calling 0208 421 7030.