As a business owner, any time spent away from your work due to illness can lead to a significant loss of income.
An income protection policy can replace lost earnings whilst you're incapacitated. But to minimize business disruption, it's worth considering private medical insurance (PMI) as well.
With private healthcare, you can bypass NHS waiting lists, speed up your recovery, and give yourself the best chance of returning to work as soon as possible.
And whilst there are tax implications to consider, it's possible for your limited company to pay for a small business private healthcare plan, even if the only employee is you.
Read on to find out more...
How does private medical insurance (PMI) work?
Private medical insurance provides a business owner or designated employee with private healthcare for new treatable conditions like cancer, back problems, mental health issues, and many other acute conditions.
PMI doesn't cover emergency treatments or injuries. For those, you should still visit Accident & Emergency at an NHS hospital.
Chronic conditions, cosmetic surgery, allergies, addiction treatment, pregnancy and childbirth healthcare are also excluded.
Pre-existing conditions can sometimes be covered but usually not until at least two years have passed on the policy without reoccurrence or incident.
Can my limited company pay for my private medical insurance?
Yes, your business can purchase private medical insurance for yourself as a company director and/or your employees. However, you should be aware there are tax implications both for the business and the employee.
What are the tax implications of paying for private medical insurance through my limited company?
As a tax-deductible business expense, the cost of employee private health insurance reduces your corporation tax bill.
However, because HMRC considers PMI to be a P11D employee benefit-in-kind for the director or staff member insured, the monthly premium is considered to be additional pay. As a result, there are two further tax implications:
- Extra income tax is deducted accordingly from the employee's pay
- The business is liable for additional employer National Insurance contributions
Whether it's more tax-efficient for your business to pay for healthcare insurance instead of paying for it personally depends on your tax band, the level of cover required and other circustances.
If you're insure on the best option, we recommend you seek independent tax advise.
Can I get private healthcare insurance for my family?
Yes, even if you're paying for the healthcare policy through your business, many insurers allow you to add a spouse and children to the plan.
Some providers don't charge any extra to add cover for your children or they may only charge for the first child.
Further information on the rules and guidelines for medical treatment business expenses can be found on the gov.uk website.