Can I claim health insurance in my tax deductibles?

In the United Kingdom, private health insurance is optional. However, if you can afford it, it still remains an option you should seriously consider taking.

Health Insurance premiums can be a big financial commitment though. This is why Her Majesty’s Revenue and Customs (HRMC) allows for deductibles. This is to help people recover some of the money they have spent paying these premiums.

They are deductible on taxes as they are monthly payments classified as medical expenses. 

However, very few people have an understanding of how these should be deducted from their taxes. To do this right, there are certain things that need to be understood. Which include when you can or cannot claim these tax deductions on your health insurance.

Health insurance premiums are expensive. The HRMC allows for tax relief on these premium payments.

When is health insurance tax deductible?

NHS treatments

In the United Kingdom, the National Health Service or NHS provides free medical treatment. Which is funded by the government using taxpayers’ funds.

You can still access the NHS free of charge if your income is lower than the tax threshold.

However, before you can qualify for NHS care, you must be a British or European citizen with a valid visa. Living and working in the United Kingdom.

Private insurance treatments

On the other hand. If you choose to take out private health insurance plans, then your health insurance premium becomes tax deductible.

To do this. You have to purchase a health insurance policy from one of the various providers in the United Kingdom.

There are three types of these health insurance policies.

They include;

  • Health Insurance policies
  • Hospital Cash Plans
  • Critical Illness plans.

Despite being tax-deductible there are limits and allowances which apply when health insurance is claimed against tax.

Limitations for tax deductions

Self employment

If you are self-employed HMRC only allows you to deduct expenses from your overall tax bill if they are exclusively business-related.

As such, you can only deduct certain costs if you can prove that you underwent treatment for work-related reasons.

This is because private health insurance has a personal benefit and, as such, it cannot be deducted.

This is not always easy to work out as you can still be fined for making wrong deductions.

Limited companies

If you use your limited liability company to make your health insurance payments. You may deduct your health insurance from your taxes in two ways;

  • As the company
  • As an employee of the company

To do this, the company has to report the health insurance cost on a P11D form. The company also has to pay Class 1A National Insurance at 13.8% of the cost.

Other instances which are deductible

If your company pays £500 a year in taxes then it owes the HRMC 13.85% of that cost. However, if your company merely pays for annual health check-ups. For example, eye tests, glasses or contact lenses that are required by health and safety law. Including any insurance coverage for work related injuries, as well as treatment, while you are working abroad are also tax deductible.

As an employee of the company your health insurance only counts as a benefit in kind. Which means that the policy counts as income and attracts tax at the same rate as your salary.

When is health insurance not tax deductible?

While health insurance premium payments may be tax-deductible. It does not apply to everyone. As there are limitations before these taxes are considered deductible.

These include:

Having a business medical insurance, but not a personal medical insurance

If you do not pay health insurance premiums or have a policy, then you cannot take a tax deduction for it.

That is, if you do not take out a health insurance policy, then it means you pay no premium. Which means you cannot deduct health insurance premium payments from your taxes.

Even if your employer takes out a health insurance plan on your behalf, as long as they pay the premium, it is still not deductible from your tax statement.

If your employer only pays part of a policy taken out on your behalf, then you may deduct the amount you pay as premiums from your taxes.

Your premiums are payed with pre-tax money

If you pay for your health insurance with pre-tax money, it can not be claimed as a tax deduction.

If your insurance is paid through your employer, the premiums are deducted from your pay before your income tax is calculated.

This means that your income is paid using pre-tax money and as such it is income-tax-free meaning it cannot be claimed as a tax deduction.

Medical treatments that have been reimbursed

All medical expenses that you receive reimbursement for cannot be deducted from your taxes.

Cosmetic procedures

Cosmetic expenses and procedures which are unrelated to your health are also non-deductible.

Non itemised tax deductions

Unless you are self-employed or you itemise your tax deductions, you cannot deduct health insurance from your taxes.

Limitations to the amount of health insurance that is deductible

If your health insurance plan can be claimed as tax-deductible. You should also know that there are limitations to the amount of your premium you can write off.

You can only deduct medical expenses which exceed 10% of your adjusted gross income. This is only possible if your deductions are itemised.

If you are self-employed. You do not have to exceed the 10% threshold. This is due to the premiums being written off as an adjustment to your self-employment income. Rather than as a tax deduction.

Tax relief on private health insurance premiums is given at the standard rate of 20% and is limited to £1000 for each adult and £500 per child.

Other medical expenses you can claim tax relief on

Aside from Private Health Insurance premiums there are also a number of medical policies that are tax deductible.

  • They include:
  • Long-term care
  • Therapy
  • Birth control
  • Medical prescriptions
  • Contact Lenses
  • Crutches
  • Travel costs incurred when going for medical care

NOTE: You cannot claim tax deductions on cosmetic surgery done for personal reasons.

Health insurance premiums are expensive. The HRMC allows for tax relief on these premium payments. However, there are rules and limitations to this tax relief. Knowing these rules and limitations will be key in helping you decide if you should get health insurance and what type of health insurance you should get. 

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