How private medical insurance affects your tax?

Yes, directors or owners of limited companies are eligible for tax relief as this is classed as business expenditure. Therefore, in this instance, it would benefit the business to pay for the private healthcare cover through the business bank account.

For unincorporated businesses, the cost of providing healthcare cover for employees is deductible when calculating taxable profits. That’s because it’s classed as a valid expense of the business and therefore eligible for tax relief.

As the owner of the business, a private healthcare plan for yourself would be classed as personal expenditure. This means you won’t be able to claim it as a business expense.

Yes. At the end of each tax year, you’ll need to complete and submit a P11D form for each employee, which states the benefits they’ve received. You’ll also need to complete and submit a P11D(b) form and pay Class 1A National Insurance on the value of the benefit. (The National Insurance rate is currently 13.8%.)

A P11D is a form issued by HMRC. It’s also known as the ‘P11D expenses and benefits form’.

At the end of each tax year, employers have to complete a P11D for every employee who:

• Earns over £8,500 and;
• Has received expenses or benefits in addition to their salary. (This doesn’t include routine business expenses and benefits like travel and company car fuel.)

Difference between a P11D and a P11D(b)

• A P11D is the end-of-year expenses and benefits form an employer needs to report for employees who earned £8,500 or more.
• A P11D(b) is used to report the amount of Class 1A National Insurance contributions due on expenses and benefits you’ve provided to employees.

When you provide healthcare cover to your employees, it’s considered a ‘benefit in kind’. If an employee earns more than £8,500 annually, they’ll need to pay tax on the benefit amount.

Yes it is. Healthcare cover is subject to IPT at the standard rate, which from June 1st 2017 is 12%.