Yes, and the premium is an allowable expense for the company — but it counts as a taxable benefit in kind for you, so it is rarely a tax-free perk.

How it actually works

A limited company can pay for a director's or an employee's private medical cover, and it is common for small and one-person companies to do exactly that. The premium is an allowable business expense, so it reduces the company's taxable profit and therefore its corporation tax bill. That much is straightforward.

The part people miss is the personal tax. Cover your company pays for is a taxable benefit in kind for you as an individual. The company reports it on a form P11D, you pay income tax on the value of the premium, and the company pays Class 1A National Insurance on the same amount. The benefit is taxed roughly as if it were extra salary, so it is not free money.

Whether it beats paying personally is a close call, especially for a single-director company. You are trading a corporation-tax deduction for the company against income tax and National Insurance on the benefit for you, and at many income levels those roughly offset. It can still be worth it — particularly if you would buy the cover anyway — but the advantage is usually modest rather than dramatic.

Treat the cover and the tax as two separate questions. A broker can arrange a director's scheme or an individual policy and tell you what the cover buys, and an accountant can tell you whether routing it through the company is better than paying for it yourself at your income level. The company structure changes the tax, not what the policy covers.

Questions to put to the insurer or broker

  • Is the premium fully allowable against my company's corporation tax?
  • What income-tax and National Insurance cost does the benefit in kind add for me?
  • At my income, does paying through the company actually beat a personal policy?

Related questions

Cover, tax and advice are three separate questions

This explains how business and group cover is structured, not what a scheme would cost you — that turns on your workforce, the cover level and the insurer. The tax treatment described is general and depends on your circumstances, so confirm it with an accountant, and use an FCA-authorised broker to arrange the scheme itself. Private medical insurance still excludes conditions an employee already has, and the chronic conditions every insurer excludes, whoever pays the premium.

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