Should you pay for your Health Insurance through your business: The benefits and the tax implications.

As a business owner, you have a lot on your plate. From managing employees to overseeing finances, the day-to-day work can seem never-ending. That’s why it’s important to have a safety net in place, just in case. One such safety net is health insurance.

Health insurance provides peace of mind. If you fall ill, you can get private treatment and be back to work faster. But did you know that offering health insurance to your directors and employees can also be a smart business decision? In this blog, we’ll explore the reasons why and what the tax implications are.

Why offer health insurance to your employees?

Attracting and Retaining Talent

Providing health insurance is an attractive benefit for employees and can help your business attract and retain top talent.

Improving Employee Well-being

Health insurance can give your employees financial security and improve their overall well-being.

Boosting Morale

Offering health insurance can increase employee morale and job satisfaction.

Should You Put the Cost of Health Insurance Through Your Company?

Corporation Tax impact

Many business owners wonder if they can put the cost of their health insurance through their limited company. The good news is, in general, the premiums for health insurance policies taken out for directors and employees are an allowable business expense for corporation tax purposes. This means you can claim the cost of the insurance premiums as a tax deduction when calculating your company’s taxable profit.

Income Tax Impact

It’s important to note that health insurance is considered a benefit in kind for employees and must be reported to HMRC on a P11(d). This means the cost of the insurance is treated as taxable earnings for the employee and is subject to both income tax and National Insurance Contributions (NICs).

Final Thoughts

Offering health insurance to your directors and employees can be a smart business decision. It provides peace of mind, can attract and retain top talent, and can improve employee well-being and morale. Plus, the cost of the insurance can be a tax-deductible business expense for your company. It’s worth considering for any business owner looking for a safety net. If however, you are only planning to offer this benefit to yourself as the owner of your company, and not to your employees, then you would usually be better off just paying for the health insurance personally.