Yes you can. It’s unlikely to make much of a difference to you financially though, so don’t get too excited!
If a company pays for private medical insurance on behalf of an employee (including a director) then it’ll save corporation tax on the cost – currently at 19%, though it could be at as much as 26.5% if corporation tax goes up as planned in 2023.
Great! But, although there’s that tax saving, it creates two further liabilities.
- The company has to tell HMRC the amount paid for the director’s cover (and, if applicable, their family’s) each tax year – the Benefit in Kind - on a form called a P11D. The company has to pay Class 1A National Insurance on the cost at 13.8%. It’s going to save corporation tax on that payment, but it’s already wiped out more than half of the tax saved.
- Then the director has to pay income tax on that Benefit in Kind too. The rate depends upon how the person’s income is made up, but though it’s just about possible that it could fit into their 0% tax band without shifting anything else up into a higher rate of tax, it’s far more likely that it’s going to effectively be taxed at 7.5%, 20%, 25%, or maybe some other rate.
So it’s actually pretty unlikely that the arrangement is going to save any tax overall (and it’s also likely to involve paying your accountant to do the paperwork, or be implied in whatever overall fee you’re paying them). If you can get a much better deal if the company pays, fine. Otherwise it’s not going to make much difference to you whether you pay personally or through your company. In practice, it’s really quite rare to see an owner-managed company paying for medical cover for its directors – most people keep it simple and pay for themselves.