Reply to: Choose best health insurance for contractor

[WordIsBond]

Ah, much better.

The tax savings aren't a lot, of course, but in the normal case it is marginally more tax efficient to pay for the insurance through the company. As always, you can ask your accountant to do the sums, and as always (and as this case proves) you can then run the numbers yourself to see what they are missing. The old "trust but verify" and expect them to explain if your verification doesn't tie out.

[Contractor UK]

Thanks WIB. Updated.

Is it tax efficient to put private health insurance through your limited company? :: Contractor UK

[WordIsBond]

Updated Article for Medical Cover courtesy of Intouch

Is it tax efficient to put private health insurance through your limited company? :: Contractor UK

Remind me not to use Intouch.

Compare this with the company paying, the premium cost remains at £1,200 plus the Class 1A NI of £166, a total cost of £1,366. You would be taxed personally at 40% of the value of the benefit being £480 and that tax cost would need to be met from dividend income, using the same principles above, using up £878 of contracting income. So, the total cost to the company is £2,244. This is more expensive than paying personally!

The company would also SAVE £259.54 in Corporation Tax (19% of £1366), which is completely left out of this analysis. So the total cost to the company would be £1984.46, which is not more expensive than paying personally.

The company's cost (both the premium and the Class 1A NI) reduces the profit, and thus the corporation tax. Any analysis which leaves that out of the computations is not worth the bandwidth it takes up or the time I wasted reading it. I'd expect better from CUK.

[Contractor UK]

Updated Article for Medical Cover courtesy of Intouch

Is it tax efficient to put private health insurance through your limited company? :: Contractor UK

[SueEllen]

Unfortunately it depends it depends on the insurer, your medical history and whether you claim how much your payments go up by.

Oh and some private providers due to them being the company that provided benefits and private health care to ex-employers I wouldn't touch with a barge pole. Then again some of them have been involved in the benefits fiasco.

[SuperZ]

I recommend getting a quote for health insurance and then starting a savings account called "Health fund" and paying the amount into that instead.

[DeadEyedJacks]

Escalating renewal costs

Was with Health On Line (aka AXA) for a while but costs kept escalating at renewal, apparently I have this habit of getting older ever year ...

Finally decided that the exclusions and deferment periods, basically meant, it would be easier to join the regular NHS queue.

Private Health insurance seems to be like VIP lines at airport, still the same checks, people and plane, just get to sit at the front a little quicker...

[TomBradleyWPA]

Hello all,

I'm trying to choose a good deal for a private health insurance.
Do you recommend anything?

Thanks!

Hi, If you want to know about more about WPA, more than happy to help. Me & Simon look after all contractors who take out a policy with WPA.

Medical Cover for contractors from WPA :: Contractor UK

[SteelyDan]

That article is somewhat outdated.

Yeah i looked at that recently; as you say, outdated.

[WordIsBond]

Here is an article about it

Is it tax efficient to put private health insurance through your limited company? :: Contractor UK

That article is somewhat outdated.

[saptastic]

Here is an article about it

Is it tax efficient to put private health insurance through your limited company? :: Contractor UK

[VectraMan]

Having health insurance through my previous employer led to HMRC making a complete mess of my tax code as they attempted to adjust for the BIK. I think if you have the option just pay for it yourself.

I've experienced claiming with Aviva. They paid for some of my surgery, but not all of it. Apparently the surgeon is meant to wake you up in the middle of the operation so you can phone your insurer to get approval for what he wants to do...

[BlueSharp]

When I looked into what could be put through a company it looked like some income protection could be tax deducted and not subject to BIK.

These Ltd policies would insure your company against having to payout long term sick, however the sick pay was made via the company and subject to normal taxation and you would have to keep the company running.

[Gius]

My accountant told me that would be better to pay it privately and not through my limited company. He says it can create a business in kind, but dunno what it means.

[WordIsBond]

OK thanks, I need to check this out with accountant to see what's what...

Yes, it's a Benefit in Kind.

If your salary is £8K, it may be worth putting through the company. You save 20% Corporation Tax. You have to pay 13.8% employer NIC on it, but that's deductible from corporation tax, so the net cost is 11%. So you save 20% and spend 11%, an overall savings of 9% on your premiums.

But for the tax savings, you'll have the hassle of having to report it on your P11D and making the extra payment to HMRC. Whether that's worth it to you may depend on how much the premium is, whether you are already filing a P11D, etc.

If your salary is up to the personal allowance and you are using the employment allowance, you probably don't want to put it through your company.