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Pay for private healthcare through your limited company in a tax-efficient way
“I’ve helped hundreds of UK company directors set up tax-efficient protection that covers both their family and business. Private health cover can be surprisingly affordable when structured through your company.”
— Jody Pearmain, Director
Private Health Insurance, often called Private Medical Insurance (PMI), is designed to give you fast access to medical treatment when you need it. Instead of joining long NHS waiting lists, you can be seen quickly by a specialist, choose where you’re treated, and get the care you need at a time that suits you.
Most policies cover the cost of consultations, diagnostic tests, hospital treatment and surgery. Many also include cancer care, physiotherapy, mental health support and other outpatient services, depending on the level of cover you choose.
For company directors, there’s an added layer of flexibility. Rather than paying for health insurance personally out of taxed income, your limited company can fund the policy on your behalf. The company pays the premiums directly, treating them as a legitimate business expense. You’ll then declare the cover as a benefit-in-kind, but overall it’s usually more tax-efficient than paying privately.
This setup means you can enjoy the advantages of private healthcare while keeping more of your net income intact — a smart balance between personal wellbeing and business efficiency.
| Personal Private Health Insurance | Company-Funded Private Health Insurance |
|---|---|
| Paid from your personal income after tax. | Paid by your limited company as a business expense. |
| No corporation tax relief available. | Corporation tax relief may be available on premiums. |
| No reporting to HMRC required. | Declared as a benefit-in-kind on your P11D form. |
| You cover the full cost personally. | The business covers the cost, helping preserve your take-home pay. |
Yes, as a company director you can choose to pay for your private health insurance through your limited company. In fact, many directors do exactly that because it can work out more tax-efficient than paying personally.
HMRC views company-paid private health insurance as a benefit in kind. That means the cost of the policy is declared on your P11D form each year and you’ll pay income tax on the value of the benefit — similar to how a company car or medical benefit is reported.
However, because the company is funding the policy, it can usually claim the cost as a business expense. This provides corporation tax relief on the premiums, reducing the overall cost to the business. In most cases, the net result is that it’s still more efficient than paying from your own taxed income.
HMRC provides guidance on this in its Employment Income Manual (EIM21774), which explains how medical benefits and insurance premiums should be treated for tax purposes.
Example:
If your company pays £1,200 per year for private medical insurance, it can deduct that amount before corporation tax. At a 19% rate, that’s a saving of around £228. You would still pay income tax on the benefit, but overall the total cost to you is often lower than paying the same premium personally.
In short, while the cover is technically a benefit, funding it through the company can reduce your real out-of-pocket cost — especially when you factor in the corporation tax saving and the convenience of paying from gross profits rather than post-tax income.
For most company directors, private health insurance isn’t about luxury — it’s about keeping the business running smoothly. When you’re responsible for revenue, staff and clients, time away from work can quickly become costly. That’s why more directors are choosing to fund private medical cover through their company rather than waiting for the NHS.
According to data from the Association of British Insurers (ABI), the average NHS waiting time for consultant-led treatment in 2024 exceeded 14 weeks — while most private health policies offer access to specialists within days.
For directors, that difference isn’t just about comfort — it’s about protecting productivity and preserving the health of the person the business relies on most.
Setting up private medical insurance through your company is straightforward. Most directors handle it in exactly the same way as any other legitimate business expense. Here’s how it typically works in three simple steps:
Some directors also choose to extend the policy to their spouse or family members. As long as they’re employed and on the company payroll, they can be added as additional insured members. This can be a cost-effective way to provide healthcare for the whole family while keeping the structure within the company.
Once everything is in place, premiums are paid automatically and any tax adjustments are handled through your accountant or payroll provider. It’s a simple, transparent process that makes private healthcare both accessible and tax-efficient for limited company directors.
The UK has several major private medical insurers offering cover suitable for company directors. Each takes a slightly different approach to pricing, hospital access and added benefits — so it’s worth comparing before you choose. If you’re just starting out, see our Private Health Insurance overview or our guide for small business owners.
Bupa, AXA Health and Aviva are the most established providers, known for broad hospital networks and strong digital claims support. Vitality focuses on rewarding healthy lifestyles, while WPA and Freedom Health Insurance often appeal to smaller businesses looking for simple, good-value plans.
Some insurers include virtual GP services, mental health support or cancer cover as standard. Others offer modular plans where you can tailor the policy to your budget — whether you want essential inpatient treatment or comprehensive care for you and your family.
As independent advisers, we compare the whole market to find the best value and fit for directors and small companies. Our role is to explain the differences clearly and make sure your cover is structured tax-efficiently through your limited company.
Private health insurance is just one part of a complete protection plan for company directors. It focuses on your health and recovery — ensuring you get fast diagnosis and treatment to minimise disruption to the business. But for full financial security, it works best alongside other company-funded protection.
Relevant Life Insurance provides a tax-efficient way to fund life cover through your company, with benefits paid to your family via a discretionary trust — usually outside your estate for inheritance tax purposes.
Executive Income Protection replaces part of your salary and dividends if you can’t work due to illness or injury, keeping both your income and the company’s obligations on track.
Key Person Insurance protects the business itself — covering lost profits, debts or recruitment costs if a key director or employee dies or becomes critically ill.
Together, these policies form a Director Protection Plan covering life, income and health — giving you complete peace of mind that both your family and company are protected.
When a company pays for Private Medical Insurance on behalf of a director, it is classed by HMRC as a benefit in kind. This means the value of the premium is reported on your P11D form and personal tax is due on that benefit — much like with a company car or other non-cash perks.
However, the company itself can usually claim the cost as a corporation tax-deductible expense under s335 of the Corporation Tax Act 2009. The key condition is that the expense must be incurred “wholly and exclusively” for the purposes of the business — a rule that typically covers director and employee health cover where it’s provided as part of a legitimate remuneration package.
There’s no National Insurance contribution (NIC) payable by the company on the premiums themselves, although the employee (or director) will pay income tax on the benefit amount declared.
In simple terms: the company saves on corporation tax, while you gain private medical cover through your business. The overall cost is usually lower than paying personally — even after the benefit-in-kind charge.
Always confirm the treatment of premiums with your accountant — tax rules can vary depending on your company structure and how your remuneration is arranged.
Here’s a simple example showing how the cost of private medical insurance (PMI) can work out when paid personally versus through your limited company:
| Scenario | Personal Policy | Company Policy |
|---|---|---|
| Annual Premium | £1,000 (paid from your taxed income) | £1,000 (paid by your company) |
| Corporation tax relief (19%) | – | –£190 |
| Benefit-in-kind tax (approx. 30%) | – | +£300 |
| Effective cost | £1,250 (grossed-up income) | £1,110 (after relief and BIK) |
In this example, paying through the company could save around £140 per year — roughly an 11% reduction in overall cost. These figures are for illustration only; the actual tax impact will depend on your company structure and personal circumstances.
Tip: Always check with your accountant or adviser before deciding how to fund private health cover. HMRC’s view can vary depending on how your business remunerates directors.
Company-funded private health insurance isn’t just for large corporates — it can be highly effective for smaller businesses and limited company directors who want to protect their health and productivity. Here’s who typically benefits most:
Whether you’re a sole director or run a small team, private medical cover can form part of a wider business protection strategy — helping you stay healthy, safeguard income, and reduce disruption to the company.
Yes. Your limited company can pay the premiums directly to the insurer. HMRC treats this as a benefit in kind, but the company can usually claim the cost as a business expense. You’ll pay personal tax on the benefit, but overall it can still work out cheaper than paying personally.
Yes — under Section 335 of the Corporation Tax Act 2009, premiums can be deducted against company profits if they’re “wholly and exclusively” for business purposes. Always confirm with your accountant for your specific setup.
Yes. The value of the premium appears on your P11D form each tax year as a benefit in kind. You’ll then pay the relevant income tax on this benefit through self-assessment.
You can, as long as they are employees or directors of the company. Many family-run businesses include spouses or key staff on the policy, helping everyone access private treatment quickly and keep the company running smoothly.
Relevant Life Insurance pays a lump sum if a director or employee dies while covered. Private health insurance instead covers the cost of medical treatment while you’re alive — helping you recover faster and minimise downtime for the business.
Written by Jody Pearmain
Director of My Key Finance Ltd — FCA-authorised specialists in business protection and life insurance for UK company directors.
“I’ve helped hundreds of company directors structure protection plans that keep both their families and businesses secure. Private healthcare has become increasingly important as NHS waiting times rise — but with the right advice, directors can make it surprisingly tax-efficient.”
Jody was very helpful in explaining the options and I thoroughly recommend his company
We received a wonderful service from mykeyman and will be using them again. The service and product knowledge from team is excellent. Everything was made easy to understand. The price was the best we found too.
I had a great time working with My Key Man Insurance when I applied for the different insurances they offer. They were able to answer all of my questions quickly and effectively. I will recommend them to my friends and family.
Jody was very helpful in explaining the options and I thoroughly recommend his company
The standard of service was first class. They kept me up to date with progress on my Relevant Life Policy, followed up promptly following delays caused by my medical practice being slow in compiling reports, and responded instantly and clearly to any questions I had.
We received a wonderful service from mykeyman and will be using them again. The service and product knowledge from team is excellent. Everything was made easy to understand. The price was the best we found too.
Jody was very helpful in explaining the options and I thoroughly recommend his company
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