Health insurance can affect your tax liability, and the specific impact will depend on your employment status. If your employer pays for your health insurance, you’ll generally pay tax on the policy premiums as it’s considered a “benefit in kind.” This means that it’s a benefit you receive from employment but not included in your salary or wages. If you’re not receiving an income, having a health insurance policy is unlikely to have any tax implications.
Some tax relief may be available if you’re the director or owner of a limited company and the business pays for the health insurance policy. However, if you’re the director or owner of an unincorporated business, health insurance for yourself would be classed as personal expenditure, and you couldn’t claim tax relief on your policy.
As an employer, you must submit a P11D form to HMRC every year, which details the salaries or wages of employees who’ve earned £8,500 or more. Alongside the P11D, HMRC requires a P11D(b) form, which details the amount of Class 1A National Insurance contributions due on expenses and benefits provided to employees during the last financial year. If an employee earns more than £8,500 annually, they’ll need to pay tax on the amount of the benefit received.
However, if you receive money directly from your health insurance policy, such as a small payment instead of choosing to stay in an NHS hospital, this won’t be taxed.
It’s important to note that Better Health Insurance Advice cannot offer guidance on the tax implications of having health insurance. We recommend speaking to an independent financial adviser, a tax adviser, or HMRC directly for more information. Our expert healthcare consultants are not trained to offer this kind of advice.
