tax status of insurance and medical cover?

Stephen66

Hi.

I know some companies offer private medical insurance as a perk to their employees. Is this treated like a company car by the IR, do they tax you on this "perk"?

If you are self-employed and you take out insurances, are you: (i) taxed on these "perks", (ii) nothing - the costs are tax neutral, or (iii) able to claim relief on these expenses? I am thinking of private medical insurance, critical illness cover, loss of earnings cover, etc?

Thanks.

WHA

As an employee, the cost is indeed regarded as a taxable benefit in kind.

As a self employed person, they are treated as drawings, not a business expense, so you don't get tax relief.

brantwood150

Stephen66 wrote:

Hi.

I know some companies offer private medical insurance as a perk to their employees. Is this treated like a company car by the IR, do they tax you on this "perk"?

If you are self-employed and you take out insurances, are you: (i) taxed on these "perks", (ii) nothing - the costs are tax neutral, or (iii) able to claim relief on these expenses? I am thinking of private medical insurance, critical illness cover, loss of earnings cover, etc?

Thanks.

Yes, PMI is a taxable benefit for an employee if it is paid for by the employer.

As a self-employed person, you wouldn't be taxed on the cost of PMI but it would not be a deductible cost for tax purposes for the business either.

All of the insurance based products you mention above are personal, rather than business, expenses and would fall into the same category.

sertav

Yes, PMI is a taxable benefit for an employee if it is paid for by the employer.

Indeed, the guidance I got from HMRC was that if the insurance costs, say, £10 and the employer covers half of it, then a taxable benefit of £5 - the remainder, would arise.