P11D / Tax information

First, a quick heads-up: We aren’t tax advisors! However this is our understanding of how things work. For the official word, it’s always best to chat with your accountant or check the HMRC website.

 

When you provide private medical insurance (PMI) for your team, HMRC treats it as a Benefit in Kind and each employee will have tax to pay which used to be reported by an annual P11D form, whereas the new system is it to go via Payroll. Link

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The good news is that company health insurance schemes are usually more affordable than individual policies. If you pay for health insurance yourself, you are using income that has already been taxed. Through a company scheme you should pay less tax.

 

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For the Employee

• Income Tax: Employees pay income tax on the value of their insurance premium (at their marginal rate of income tax) Link

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For the Business

• National Insurance: The company pays Class 1A National Insurance on the total cost of the premiums. For the 2026/27 tax year, this rate is 15%.

• Insurance Premium Tax (IPT): Private medical insurance is subject to the UK's standard IPT rate of 12%. This tax is automatically added to your base insurance premium by the provider. Unlike standard VAT, businesses cannot reclaim IPT.

• Corporation Tax: The good news? The cost of providing health insurance is usually a tax-deductible business expense, which can help lower your overall Corporation Tax bill.