How is Private Health Insurance Taxed?

I have had Private Health Insurance in the past through work and I am now considering taking out my own personal plan. I know I had to pay some form of tax on my company health insurance, will this be the same on a personal plan?

Question asked by Paul Revell
Compare Top 10 UK
 Health
Insurers
 
Takes approx. 60 seconds
Level of Cover
Excess
Date of Birth
Loading your options...
Thank you for using our Quote Tool
If you need some help, just call us!
T: 02074425880
Our in-house Experts are here to provide FREE impartial advice!
Our Experts can answer all your questions
Our Experts can send you more appropriate options based on your personal circumstances

Very important if you are either Self-Employed or a Company Director.

Our online quote tool is good but our Experts are better

Oue Experts have access to far more insurers and can often find a better deal offline.

Saves you time, let our Experts do what they are best at

Answered by Tom Conner

Taxation of Health Insurance

The way that Private Health Insurance is taxed depends on whether you have taken out a Personal Health Insurance plan or are part of a Group Private Health Insurance plan supplied by your place on employment.

 

How is Business Health Insurance Taxed?

When a company pays for Business Health Insurance on your behalf, the premiums are typically eligible for corporation tax relief. As a result, Group Health Insurance is considered a taxable P11D benefit in kind.

Tax on Business Health Insurnance

This means, for Group Health Insurance, employers pay National Insurance contributions on the premiums as if they were part of an employee’s remuneration.

What’s more, it’s a taxable benefit for employees and is therefore added to earnings and taxed as income.

This is charged at your highest marginal tax rate, which is determined by your total earnings, including employer provided benefits. The most common way of paying for a P11d benefit is having your tax code reduced in the following tax year to reflect the tax you need to pay on the benefit you received.

 

Do I Have to Pay Tax on Personal Private Health Insurance?

Because Individual Health Insurance is paid for with your net earnings (i.e. your income after you have paid income tax and your national insurance contributions have already been deducted), the only tax you need to pay for your policy is Insurance Premium Tax (IPT).

Insurance Premium Tax is already incorporated in the pricing of your Health Insurance Premiums, so there is no additional tax you need to worry about. Since June 2017, IPT is charged at 12% of your net premium.

 

How is Health Insurance Purchased Through my Own Company Taxed?

If you own your own business, you can purchase your Private Health Insurance through your own limited company. Your company will pay for the premiums while you will benefit as an employee.

If you decide to buy Contractors’ Health Insurance, you will need to pay the same tax as an employer providing a Group Health Insurance policy for their employees. This includes Employer’s National Insurance Contributions at 13.8% for the company and income tax for the contractor at their highest marginal rate.

 

Which is the Most Tax-Efficient Way to Buy Health Insurance?

The most tax efficient way of receiving Private Health Insurance cover will be dependent on your circumstances.

The best course of action is to speak to a financial adviser. An expert will help you realise the most cost effective and reliable way of purchasing a Private Health Insurance policy that matches cover with cost.

To learn more about your Private Health Insurance options, contact us today on 📞 01273646484 to get valuable Health Insurance advice.

Employee Benefits
 
Private Health Insurance
 
Tax
 
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
Compare Top 10 UK Insurers
  Takes approx. 60 seconds
 - 
Need help? 
Call us on 

Frequently Asked Private Medical Insurance Questions

 
I go to a private dentist for check-ups and hygienist and pay for the treatment out of my own pocket....
 
I’ve noticed a small amount of tax taken out of my monthly salary for my private health insurance....
 
I am considering taking out a health insurance policy and wanted to know whether the premiums would...
 
I am moving closer to retirement and am looking at my options when it comes to private health insurance....
Need Help? Live chat now and get an instant answer from our Experts...

Neil
Pensions

Victoria
Insurance
Our Latest Reviews
Robert Eldridge
07/06/2018

Rauri was easy to talk to. Explained everything really well. Took prompt action when requested and was in touch when he said he would be without being pushy.

Attila Mako
07/06/2018

Excellent service. Oliver was very helpful and patient with me. He gave me knowledgeable advise describing the product details clearly. His communication was prompt and precise! Great customer service!

Ian Brett
26/05/2018

Josh made a complicated process easy and I was kept informed throughout. I will be recommending Drewberry to every one who asks and even those who don't.

We are rated 4.9/5 based on 1512 independent client reviews.
To read more of our independent client reviews click here →
REVIEWS
EXCELLENT
4.92 / 5 Average
1638 Reviews
D Gianfreda
Overall Rating
Friendly, efficient and professional service
T Bullock
Overall Rating
Friendly and professional
l kelham
Overall Rating
Excellent service, clear communication and advice
B Weller
Overall Rating
Very thorough service
E Portingale
Overall Rating
I had a short time to ensure I was covered appropriately due to change of circumstances and house move. I required a number of insurance policies for my new situation. I contacted Drewberry Insurance and found that they understood all of my needs and the best way to filter and sift appropriate insurers. They clearly understood the process...made everything very easy online and via telephone and always did as they said they would by actioning everything as and when requested. This took the time and confusion away from becoming insured. Their interaction and communication and explanation of all processes ensured I understood each stage of the process. Will recommend their services to anyone seeking insurance.