How Is Business Health Insurance Taxed?

I’m looking to set up Health Insurance for my business. Can you explain how this HMRC will tax business Health Insurance? Does the business or my workers need to pay any tax on this benefit?

Question asked by Sarah Wright

Your company pays the premiums on a Business Health Insurance policy. HMRC usually therefore considers these premiums a business expense allowable against corporation tax.

However, Business Health Insurance is a P11D / benefit in kind for the employee receiving the benefit.

Employers therefore need to fill out a P11D form to declare this benefit in kind to the taxman. HMRC will then tax employees accordingly.

HMRC typically achieves this through a reduction in the employee’s annual allowance. A lower annual allowance means the employee the policy covers can earn less before income tax kicks in.

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