Last reviewed: June 2026 | Source: HMRC
TL;DR- Individuals paying for private medical insurance (PMI) personally cannot deduct premiums from their income tax liability.
- Self-employed individuals cannot deduct PMI premiums as a business expense against their trading income.
- Employers can deduct PMI premiums as a business expense for corporation tax or income tax purposes, but the premium is a taxable benefit in kind for the employee.
- Employees receiving employer-paid PMI must pay income tax on the premium value, reported via P11D.
- PMI premiums are exempt from Insurance Premium Tax (IPT) -- no VAT or IPT is added to health insurance premiums.
Key Facts
●Personal PMI: not tax deductible
●Self-employed PMI: not deductible against trading profits
●Employer PMI: corporation tax deductible but taxable benefit for employee
●P11D reporting: employer reports PMI value annually
●IPT on PMI: exempt (no insurance tax on health insurance)
●HMRC reference: EIM21820, BIM45525
Can Individuals Deduct Private Medical Insurance From Tax
No. Individuals who pay for private medical insurance out of their own income cannot deduct the premiums when calculating their income tax liability. HMRC does not treat personal PMI as an allowable expense against employment income or any other form of personal income. This applies whether the insurance is purchased for the individual alone or for the individual and their family.
There is no tax relief system for personal medical insurance premiums in the UK, unlike the position in some other countries. The only partial exception concerns older arrangements: policies taken out before 6 April 1990 under the MIRAS (Mortgage Interest Relief at Source) era may have different treatment, but this is a historical edge case with no practical relevance for new purchasers.
Can the Self-Employed Deduct Health Insurance
No. Self-employed individuals cannot deduct private medical insurance premiums as a business expense against their trading profits. HMRC's position, set out in the Business Income Manual at BIM45525, is that health insurance is a personal expense even for sole traders and partners, because it relates to the health of the individual rather than being wholly and exclusively for the purposes of the trade.
This is the case even when a self-employed person argues that their health is essential to their ability to work and generate income. The "wholly and exclusively" test in section 34 of the Income Tax (Trading and Other Income) Act 2005 requires the expense to be incurred for business purposes only. Personal medical insurance does not meet this test.
Employer-Paid Private Medical Insurance: Tax Treatment
The position is different when an employer pays for an employee's private medical insurance as part of a remuneration package. In this case:
For the employer: The premium paid is a deductible business expense for corporation tax (or income tax for unincorporated businesses), in the same way as salary and other employment costs. The employer can claim relief on the full premium paid.
For the employee: The premium paid by the employer is a taxable benefit in kind. The employee pays income tax on the value of the benefit, which is the premium paid by the employer. National Insurance contributions are also due -- the employer pays Class 1A NIC on benefits in kind at the current rate of 13.8%.
P11D Reporting for Employer-Paid PMI
Employers must report the value of private medical insurance provided to employees on form P11D, submitted to HMRC annually after the end of the tax year. The value reported is the cost of the insurance to the employer. Employees are then taxed on this amount through their tax code or self assessment. Employers also complete form P11D(b) to report the Class 1A NIC liability on all benefits in kind, including PMI.
Where PMI is provided through a salary sacrifice arrangement (where the employee gives up salary in exchange for the employer providing insurance), the tax and NIC treatment follows the salary sacrifice rules, which changed significantly from April 2017. Most salary sacrifice PMI arrangements are no longer tax-advantaged under the post-2017 rules unless the employee earns below the personal allowance.
Is Health Insurance Subject to IPT or VAT
Private medical insurance is exempt from Insurance Premium Tax (IPT) and from VAT. Health insurance is a long-term insurance product and falls outside the IPT regime entirely. The standard (12%) and higher (20%) IPT rates that apply to motor and travel insurance do not apply to PMI. This means the full premium quoted for health insurance is the true cost, with no tax element added on top.
Frequently Asked Questions
Is private medical insurance tax deductible for the self-employed?
No. HMRC does not allow self-employed individuals to deduct private medical insurance premiums as a business expense. Health insurance is treated as a personal expense under HMRC Business Income Manual BIM45525, regardless of whether the individual argues their health is necessary for their trade.
Do employees pay tax on employer-provided health insurance?
Yes. When an employer pays for private medical insurance on behalf of an employee, the premium is a taxable benefit in kind. The employee pays income tax on the value of the premium, and the employer pays Class 1A National Insurance at 13.8% on benefits in kind. The benefit is reported on form P11D.
Can a limited company pay for private medical insurance?
Yes. A limited company can pay PMI premiums for directors and employees and deduct the cost as a business expense for corporation tax purposes. However, the premium is a benefit in kind for the director or employee, meaning they pay income tax on the value and the company pays Class 1A NIC. For a sole director-shareholder, this is often less tax-efficient than it appears once the benefit charge is factored in.
Is there VAT on private medical insurance?
No. Private medical insurance is exempt from both VAT and Insurance Premium Tax (IPT). Health insurance is a long-term insurance product that falls outside the IPT regime. No tax is added to the quoted premium.
