How To Claim Medical Insurance Through Your Company

Balancing potential tax savings against benefit-in-kind charges

Written by 
Updated on
April 30, 2024

As freelancers and contractors, you don’t have generous company sick pay, so staying healthy can be an important consideration.

Medical 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.

You're likely asking, "Can I expense medical insurance through my limited company?" The simple answer is 'yes', but there are personal tax implications. Let’s take a look. 

Understanding Tax-Deductible Expenses

What Qualifies as a Tax-Deductible Expense? Tax-deductible expenses are those that you can deduct from your company's income, thus reducing your profits, and in turn your overall tax bill. But the rules governing what you can claim are specific and regulated by HMRC.

Medical Insurance and Your Limited Company

As a company

Health insurance premiums can be claimed as a deductible business expense, reducing your corporation tax liability. However, HM Revenue and Customs (HMRC) also considers these premiums as a ‘benefit in kind’. 

As such, they are deemed a taxable benefit, requiring reporting on a P11D form and incurring employer national insurance contributions by the company. If you’re a Mighty customer, Mighty will automatically take care of this for you. 

As an individual

If the company pays for medical insurance for you, it is highly likely that you will personally incur a ‘Benefit in Kind’ charge. This benefit-in-kind charge is calculated by adding the value of the insurance you’ve received to your income, impacting the amount of tax you pay.

Benefit in kind exemptions

Some health treatments are exempt from benefit in kind charges, this makes them exceptionally tax efficient to put through the company. 

These include: 

  • An annual health screening.
  • Eye examinations are exempt if they are required by health and safety legislation for employees who use a computer monitor or other screen.
  • Prescription eyewear, such as glasses or contact lenses, provided they are necessary specifically for display screen work.
  • Medical treatments provided abroad for employees stationed internationally.
  • Medical care for work-related injuries or occupational diseases.
  • Interventions that facilitate an employee's return to work for up-to £500 if the employee has been absent from work because of injury or ill health for at least 28 consecutive days

Further information on the relevant tax regulations can be accessed through HMRC’s provided guidance here. However, it remains crucial to seek personalised advice from your accountant tailored to your specific situation.

Weighing the Net Benefits

To understand the net benefit of buying medical insurance through the company, it’s vital to the corporation tax saving against the impact on your personal tax bill.

As a general rule, if you are going to buy medical insurance anyway, it is often slightly more tax efficient to buy medical insurance through the company. 

The more money you pay through payroll/dividends, and the higher rate of personal income tax you pay, the greater this tax saving will become. However it’s important to always get personal advice based on your individual circumstances. 

As a Mighty client, you can discuss this with an accounting expert at any time. Contact us via support and we’ll be happy to help.

Try Mighty today. 30 days free  - no card required. 

Can my policy cover anyone else?

Many insurance providers offer policies which allow you to add your spouse and children. You can choose this type of cover and still pay the premium through your company. 

Some insurers offer a discount if you take out cover as a couple. You may also be able to add your children at no extra cost or only pay for the first one.

If you choose to extend coverage to your family, it's essential to look at the tax implications for this.

How to claim in Mighty

If you do choose to buy private medical cover, Mighty makes claiming these expenses quick and easy - taking care of all the bookkeeping and tax savings for you.

To claim Medical Insurance in Mighty: 

  • Find the medical insurance transaction in your bank feed
  • Click categorise, and select the ‘Insurance’
  • If you’re VAT registered, select the VAT rate you were charged (usually VAT exempt)
  • Click approve

Real-Time Tax Optimisation

Mighty will apply these expenses and optimise your tax in real-time. Once claimed you’ll notice a lower corporation tax bill on your dashboard.

Want to streamline your accounting and minimise your tax? Get started with Mighty today! Get 30 days free, no card required. 

Taking the Next Steps

Understanding whether to expense medical insurance through your limited company involves balancing the benefits and the potential tax implications. With Mighty, you don't have to navigate these decisions alone. 

Ready to optimise your accounting and make informed decisions with ease? Join Mighty today to save money, time and tax.

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