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Guide

Small business health insurance explained

What is small business health insurance?

It’s an insurance policy that helps cover the cost of private medical treatment for your employees. This includes things like: 

✓ Private GP appointments 
✓ Diagnostic tests and scans 
✓ Private hospital treatment 
✓ Cancer treatment. 

With GP and hospital waiting lists on the rise, health insurance is now one of the most popular employee benefits. 

The benefits of small business health insurance

For your business 

✓ It's an employee benefit so can help attract and retain top talent   
✓ Reduces employee absence by getting your employees back to work quicker 
✓ Improves employee health and wellbeing to boost productivity 
✓ Tax incentives – as it’s a business expense, it’s tax deductible.

For your employees

✓ Convenient GP appointments that fit in with their working day 
✓ Short hospital waiting times   
✓ Choice of hospitals  
✓ A wide range of treatment, some of which may not be available on the NHS  
✓ Option to add their partner and children to their policy. 

How much does small business health insurance cost?

It’s hard to give an exact figure. This is because there are a few things that influence the cost of a policy, like:
  • Number of employees
  • Employee age
  • Occupation.
The quickest way to find out the price is to visit an independent comparison site or get a quote from an insurer’s website. You can get a Vitality small business health insurance quote here

What are the tax implications?

HM Revenue & Customs considers small business health insurance a benefit in kind. Because it’s for employees and the company pays for it, it’s seen as part of an employee's salary. So, they need to pay tax and National Insurance contributions on it.     

Business owners need to declare all benefits in kind on a P11D form. This includes company cars, non-business travel expenses, home phones for personal use, etc.   

Submit the form before 6 July following the end of the relevant tax year. Speak to HMRC or get advice from an accountant or tax adviser if you're unsure about what to include. 
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