Updated: December 14, 2022
Private Health Insurance for Self-Employed
Self-employed and considering private health care? We'll look at what it covers, the benefits, and how a broker can help
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Author: Richard Angliss - Finance Expert
Updated: November 20, 2019
Entrepreneurship is rife in the UK, with thousands of sole traders, freelancers and business owners enjoying the freedom to work on their own time.
And there can be financial benefits too. In fact, many self-employed workers reap the financial rewards that can come from deducting expenses such as private healthcare insurance from their tax bill.
But it’s not just self-employed workers – many company directors offer private healthcare to their employees and they too can benefit from tax deduction allowances.
The following topics are covered below...
What does private health insurance cover for self-employed workers?
Private medical insurance can play an important part of your financial planning, especially if you’re self-employed as you won’t receive statutory sick pay (SSP) to keep yourself afloat.
It allows you to get fast access to certain treatments in addition to what’s on the NHS, with the idea that you can get back to work quicker if you’re recovering from illness or injury.
Depending on your policy’s terms and conditions, private health insurance could provide you with:
Bear in mind that private medical insurance won’t pay out cash to cover the loss of your earnings, which is why many decide to opt for income protection insurance alongside their private health insurance cover.
Interested in finding out more? Make an enquiry and we’ll match you with an expert for a free, no-obligation chat.
What doesn’t it cover?
While private health insurance can provide you with fast, reliable access to certain healthcare treatments, there are some things it may not cover, including:
- Sick days
- Statutory sick pay (SSP)
- Cosmetic procedures
- Specific conditions which turn chronic
- Developmental issues
Some conditions may also have capped amounts for the life of the policy, so it’s worth making sure that a policy meets your expectations, and this is even easier if you work with an expert.
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Do I need income protection insurance?
Income protection insurance can be a great asset to have alongside private health care as it can pay you a monthly income should you be unable to work.
This is especially important for self-employed individuals, so it’s important to consider your options in the event that you can’t earn an income. You can opt for a long-term plan that will typically cover you until you are able to work again, or a short-term policy that lasts for one or two years and can cover you for income and potentially any outstanding debts.
How does private health insurance affect my tax?
Whether you can deduct tax from private medical insurance as a business expense depends on the type of business you have. In some circumstances, you may be able to deduct certain costs from your tax if the treatment you received was solely for business-related reasons.
See below for more information:
Director of a limited company
If you offer private health care to your employees via a limited company, this is classed as business expenditure and you can claim tax relief.
Sole trader with employees
As a sole trader, you can deduct private health insurance from your taxes as a business expense.
Sole trader without employees
Unfortunately, you would not be able to claim tax relief as it is classed as a personal expense.
Again, private medical insurance would be classed as a personal expense for a freelance worker.
If you’re a contractor working through your own limited company then the company can pay for your health insurance. However, you will have to offset the cost of any premiums against corporation tax as it is considered a P11D (or a benefit in kind) benefit. Your company will also have to pay an Employers’ National Insurance Contributions at 13.8% on the benefit.
Should I put my health insurance through my limited company or personally?
It depends on which option would be more tax-efficient. While you may think that putting health insurance through your limited company could offer you more tax benefits, the reality is that you could end up paying out for more.
For example, if you purchased a health insurance policy of £1,200 a year, then your business would also have to add an extra 13.8% on top of this figure to meet the Class 1a National Insurance requirements. While you can get tax relief on that total amount, you would also have to pay corporation tax as well as personal tax. If you paid for private health insurance personally, you wouldn’t have to pay National Insurance or corporation tax.
Need help working out the costs to see which option would be best for you? Make an enquiry and we’ll match you with someone shortly.
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Can limited company directors pay for private healthcare insurance for their employees?
Many company directors offer private healthcare insurance to their employees as a benefit within their employment contracts. In fact, figures from Laing and Buisson show that employers spent £2.56 billion on medical cover in 2011 alone.
In light of trending topics such as mental wellbeing, there has been a shift of focus in UK businesses with many making an active effort to improve their employer/employee relationships.
It’s thought that offering perks like private healthcare can:
Attract the best employees
Decrease sick days
Reduce the time taken off for periods of absence
Improve staff morale
Where can I find private health insurance if I’m self-employed?
For more information about tax-deductible private health insurance, it’s best to seek professional advice.
Specialist advice for such a niche area can be hard to come by but we do work with a select group of insurance advisors who can recommend the best plans for self-employed workers.
Looking for the best health insurance for freelancers? Speak to an expert
Speak to an expert today to learn more about the benefits of buying private health insurance as a self-employed freelancer, contractor or business owner.
The UK experts we work with can find you the most financially beneficial policy for you or your business and can recommend which policies offer the most comprehensive level of cover.
Call 0808 189 0463 or send your questions to an advisor today.
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About the author
Richard Angliss has made a career in financial services which stretches over 40 years.
His early career was spent learning about the various financial products and applying them to prudent advice, working for one of the largest life assurance and investment firms. After that he joined the financial services arm of a very well-known firm providing independent advice to their 8 million customers.
For the last 20 years he has been involved in building software solutions that help Advisers and clients work together to achieve good financial outcomes and helping to set up three independent advisory firms. He also has written many articles for financial services publications and provided commentary for newspaper journalists.
At an early stage in his career he realised the great satisfaction that comes with being able to help people achieve their goals and protect their families. “Regulation of financial services has hugely impacted on ensuring people get appropriate advice. The issue these days is access to that advice and just as importantly regular reviews to make sure that everything stays on track”.
With the growing development of online resources such as Online Money Advisor he sees a great future for people to access advice to make their pension and investment work harder for them. Plus, of course, to ensure they have insurance products in place that will be required when unforeseen events happen.
He knows getting that balance right is crucial to prudent financial planning and the wellbeing of individuals and their families.