Health Insurance P11D UK (2025):

Last updated: 29 September 2025

Short answer: In the UK, private medical insurance (PMI) provided by an employer is treated as a benefit-in-kind (BIK). This means the value of the cover must be reported on a P11D form and is subject to Income Tax for the employee and Class 1A NIC for the employer. Rules differ slightly depending on whether cover is paid directly, reimbursed, or via salary sacrifice.

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When is health insurance a P11D benefit?

• If your employer pays the insurer directly for your PMI.
• If the company reimburses you for PMI premiums.
• If PMI is included as part of a salary sacrifice arrangement.

In all these cases, the value of the benefit must be reported to HMRC.

How it’s reported (employer side)

1. Calculate the taxable value — usually the gross premium (minus any employee contributions).
2. Report on P11D — health insurance goes in section I (medical benefits).
3. Pay Class 1A NIC — employers pay 13.8% NIC on the benefit value.
4. Submit to HMRC by 6 July following the tax year.

Example (2025): – Premium = £1,200/year – Employee pays nothing – Employee taxed at 20% → £240 tax – Employer pays 13.8% NIC → £166 – Total tax impact ≈ £406

What employees need to know

• The PMI premium value appears on your P11D or in your PAYE coding notice.
• You’ll pay Income Tax on that amount at your marginal rate (20% / 40% / 45%).
• If you contribute towards the premium, this reduces the taxable value.

Ways to manage costs & tax

• Company-paid cover — higher total tax, but lower individual premiums due to group buying power.
• Cash plans — lower premiums, but still a BIK if employer-paid.
• Salary sacrifice — usually still treated as a BIK.
• Self-employed cover — different rules apply; see Self-Employed Health Insurance.
• Shop around — insurers differ in pricing for SME vs individual cover.

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Compare SME health insurance and see if group cover is more tax-efficient for your company.

Common mistakes

• Not reporting PMI — HMRC penalties apply for missing or incorrect P11Ds.
• Misunderstanding salary sacrifice — still a taxable benefit in most cases.
• Forgetting employee contributions — these must be deducted from the benefit value.

FAQs

Do I always need a P11D for health insurance?

Yes, if your employer pays or reimburses PMI. Exception: PAYE Settlement Agreements in some cases.

Can employees claim tax relief on PMI?

No — PMI is a taxable benefit, not a deductible expense for employees.

What if I’m self-employed?

Self-employed individuals usually can’t deduct PMI as a business expense (with limited exceptions).

Does it matter which insurer I’m with?

No — tax treatment is the same for AXA, Bupa, Aviva, Vitality, WPA, etc.

How much tax will I pay?

Depends on your premium and marginal tax rate. Use HMRC’s calculator for exact figures.

Disclaimer

Information only, not financial/tax advice. Tax treatment depends on individual circumstances and may change. Always check HMRC rules or consult a tax adviser.