Health Insurance pays for you to have private medical treatment, avoiding lengthy waiting times on the NHS. You therefore get treatment exactly when you need it the most.
If you’re thinking about buying Health Insurance through your own limited company, it’s likely you’re some kind of contractor or a company director.
Many of our clients working in this capacity are particularly interested in Private Health Insurance. They’re looking to speed up access to healthcare compared to the NHS. This allows them to get treatment for eligible conditions faster and be back at work earning again sooner.
With most contractors and directors lacking sick pay, this is vitally important.
Yes, it’s possible to buy your own personal Health Insurance via your limited company.
One way to do this would be to set up Business Health Insurance for yourself and your staff. Providing you have enough workers, this offers Medical Insurance to a group of employees under a single policy.
However, not every business has enough workers for a group scheme. Alternatively, you may not be looking to extend the benefit beyond yourself just yet. In such cases, it’s also possible to arrange individual Health Insurance and have your company pay.
Here, the company covers your premiums, which are usually an allowable business expense against your corporation tax bill.
There are other tax implications when you use your company to pay for your Health Insurance, however. HMRC considers it a P11D benefit in kind, so there’s additional income tax due for you as an individual on premiums.
An insurer calculates your Health Insurance premiums by firstly examining a range of personal factors, such as your:
On top of these factors, there are a range of policy options for you to consider. These will determine the coverage of your plan, making it more or less comprehensive and therefore impacting the price. These include:
To calculate the average cost of Health Insurance in the table below, we’ve compared quotes from every single major UK provider. In order to do so, we’ve assumed that each individual is:
30 Year Old
40 Year Old
50 Year Old
When you buy Health Insurance as an individual, you don’t have to worry about tax on the premiums themselves because you pay for the cover from post-tax income.
However, don’t forget that you’ll first have to generate the income you use to pay premiums within your limited company. Once you pay yourself this income from the business, HMRC taxes it accordingly.
For a contractor or director paying themselves dividends and taxed at the higher rate (32.5%), to pay for a £1,200-a-year Health Insurance policy you’d therefore need to receive a gross dividend payment of £1,778.
Then, because the company pays you dividends net of corporation tax, you’d need to earn £2,195 within the company to pay yourself the income you use to buy Private Health Insurance personally.
The alternative is to pay your Health Insurance premiums via your business.
When you go down this route, any Health Insurance policy the business buys for you counts as a P11D / benefit in kind. You’d therefore need to declare this on a P11D form and pay additional tax.
This is because when your company pays for your Health Insurance, it does so with pre-tax earnings. The business provides the policy in addition to your remuneration, so HMRC effectively sees this as your pay having gone up without you paying any additional PAYE tax.
As the business owner, you also have to pay employer’s national insurance contributions on premiums. However, your business will benefit from corporation tax relief.
To use a £1,200 annual premium as an example again, you’d have to pay employer’s national insurance contributions of £166 for a total cost of £1,366, less corporation tax relief of £260.
You’d be taxed personally at 40% as a higher-rate taxpayer on the value of the benefit (£1,200) for a total tax bill on your Private Health Insurance of £480.
This would have to be met from dividend income using the same principles as above, requiring you to earn £878 within the company to meet the cost. This results in a total bill to the company for your Private Health Insurance of £1,984, marginally less than paying for it personally.
With many optional extras and a host of different providers and policies on the market, finding the right Health Insurance can be hard enough as it is. That’s without even factoring in whether you should pay for it personally or buy cover through your limited company.
At Drewberry we do all of the hard work for you. Our experts are on hand to find the best Private Health Insurance for your needs, including tailoring the policy to suit you. We’re also here to discuss the pros and cons of running your Health Insurance through your limited company.
We started Drewberry™ because we were tired of being treated like a number.
We all deserve a first class service when it comes to issues as important as protecting our health. Below are just a few reasons why it makes sense to talk to us.
For help and fee-free advice, don’t hesitate to pop us a call on 02074425880 or email firstname.lastname@example.org.
Very helpful from start to finish. Talked through all the points and gave great advice.