Can You Expense A Medical Check Up Through Your Company?

A Guide To Putting Health Check-Ups Through Your Limited Company

Written by 
James Morgenstern
Updated on
February 19, 2024

As freelancers, consultants, and contractors paying attention to the health and wellness of yourself (as well as your company) is crucial. One way to promote a balance and potentially save tax is through company-sponsored health screenings and medical check-ups. It’s not just beneficial for employee health — it's also a savvy business decision.

Understanding Health Screenings and Medical Check-Ups

Your company can fund one health screening and one medical check-up per employee each year. Here’s what that means for you:

What counts as a check-up or health screening?

  • A health screening is a preventive service designed to identify any employees who might be at an increased risk of health issues.
  • A medical check-up involves an examination by a health professional to determine an employee's state of health, if for example they're known to already be at a high risk.
  • Note, this tax exemption does not extend to medical treatments.

Tax Exemption Eligibility

For these check-ups and screenings to be tax-exempt, they must meet the following criteria:

  • Universal Availability: The health screenings and medical check-ups should be for all employees
  • If you're the only person in the company, you can still claim and benefit from this tax exemption.

This perk is not just a boon for your well-being but also serves as a tax-efficient measure for your business. Ensuring these medical benefits are properly structured can result in significant tax savings.

A Real-World Example for Tax Savings

Let's use a real world example below to illustrate how you could save £417 of tax using this tax tip.

Let's assume that:  

  • You're a freelancer operating through a VAT registered company
  • You're a higher rate tax payer - already earning £50k pa
  • A health screening that costs £500
  • Assumed corporation tax rate of 19%

Tax savings:

  1. VAT Saved: You could claim back £83 of VAT on the £500 treatment
  2. Corporation Tax Saved: You save a further £79 of corporation tax  (19%*£417) by expensing the health check through your company
  3. Personal income tax avoided: To cover the cost yourself, you’d need to personally take £755 of dividends - and then pay £255 of income tax to leave you with £500 after tax. By paying for the check-up through the business, you avoid the need to take extra dividends and pay this £255 of tax.  

Total tax savings:

Adding all these savings together gives you a total tax saving of £417, simply by buying the medical check-up through the business, rather than paying for it personally.

Not only is the company benefiting from healthier employees, but you’re also maximising company finances in a tax-efficient manner.

How do you claim the tax saving?

Claiming the tax saving in Mighty is incredibly easy, here's how to do so in 3 simple steps.

  1. Buy the advice through your company, and find the transaction in your bank feed
  2. Select the transaction and categorise it as 'Health Care' under the Overheads tab
  3. Click 'Approve' and Mighty will automatically apply the tax savings for you in real time.

And that's it, you've just saved yourself over £417 of tax 100% legally!

If you're not with Mighty: Make a note of this transaction and let your accountant know what the specification transaction(s) is for. They should then be able to claim the exemption and apply the tax deduction manually for you.

Try Mighty for free here.

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Automate your bookkeeping, enjoy real-time tax insights, and effortlessly claim tax savings on health check-ups with our easy-to-use system and expert support.

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Content:
- The Value of Company-Funded Health Checks for Freelancers and Contractors - Understanding Health Screenings and Medical Check-Ups - Health Screening: - Medical Check-Up: - Tax Exemption Eligibility - A Real-World Example for Tax Savings - Mighty: Your Partner in Efficient Accounting
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