How Is Business Health Insurance Taxed?

Your company pays the premiums on a Business Health Insurance policy. HMRC usually therefore considers these premiums a business expense allowable against corporation tax.

However, Business Health Insurance is a P11D / benefit in kind for the employee receiving the benefit.

Employers therefore need to fill out a P11D form to declare this benefit in kind to the taxman. HMRC will then tax employees accordingly.

HMRC typically achieves this through a reduction in the employee’s annual allowance. A lower annual allowance means the employee the policy covers can earn less before income tax kicks in.