Medical or dental treatment and insurance
This guide explains what your tax and National Insurance contributions
(NICs) obligations are if you pay for an employee's medical or dental
insurance or treatment.
On this page:
You arrange and pay the provider directly for treatment
or insurance
Definitions or restrictions
You arrange a contract with the provider and pay the costs.
What to report, what to pay
For employees earning less than a rate of
£8,500 per year, you have:
- no reporting requirements
- no tax or NICs to pay
Unless one of the exceptions listed below
applies, then for company directors or employees earning at a rate of
£8,500 or more per year:
- report on form P11D - section I
- pay Class 1A NICs on the value of the benefit
Work out the value to use
The value to use is the cost to you of providing the treatment or
insurance.
Exceptions
There are no reporting requirements and you
have no tax or NICs to pay for company directors and employees earning
at or above the £8,500 rate if you provide any of the following:
- periodic medical checks or health screenings that take place no
more than once a year
- eye tests required by health and safety legislation for employees
who are required to use a computer screen or other VDU
- glasses or contact lenses that you’re obliged to provide because
an eye test required by health and safety legislation shows them to
be necessary for VDU work - as long as the glasses or lenses are only
used for VDU work
- medical treatment outside the UK when the need for the treatment
arises while the employee is working for you overseas
- medical treatment or insurance solely related to injuries or diseases
that result from the employee’s work
For detailed information on each of these exceptions, see the ‘Technical
guidance’ section below.
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Your employee arranges treatment or insurance, but
you pay the provider
Definitions or restrictions
Covers medical insurance or treatment that you pay the provider for,
but for which the contract is between the provider and your employee.
What to report, what to pay
For employees earning less than the £8,500
rate, unless one of the exceptions listed below applies:
- report on form P9D - section A(2)
- add the value of the benefit to the employee’s earnings when deducting
and paying Class 1 NICs (but not PAYE tax) through your payroll
For company directors or employees earning
at a rate of £8,500 or more per year, unless one of the exceptions listed
below applies:
- report on form P11D - section B
- add the value of the benefit to the employee’s earnings when deducting
and paying Class 1 NICs (but not PAYE tax) through your payroll
Work out the value to use
The value to use is the cost to you of providing the treatment or
insurance.
Exceptions
There are no reporting requirements and you
have no tax or NICs to pay if you pay for any of the following:
- periodic medical checks or health screenings that take place no
more than once a year
- eye tests required by health and safety legislation for employees
who are required to use a computer screen or other VDU
- glasses or contact lenses that you’re obliged to provide because
an eye test required by health and safety legislation shows them to
be necessary for VDU work - as long as the glasses or lenses are only
used for VDU work
- medical treatment outside the UK when the need for the treatment
arises while the employee is working for you overseas - provided you’ve
committed in advance to be responsible for medical costs incurred
by the employee in these circumstances
- medical treatment or insurance solely related to injuries or diseases
that result from the employee’s work
For detailed information on each of these exceptions, see the ‘Technical
guidance’ section below.
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You reimburse an employee's costs
Definitions or restrictions
Covers insurance or treatment that an employee arranges and pays for,
but which you then reimburse to the employee.
The same rules also apply if you provide the
employee with either:
- a cash allowance to cover medical costs
- additional salary to meet medical costs
What to report, what to pay
These reimbursements count as earnings, so
unless one of the exceptions below applies:
- add them to your employee’s other earnings
- deduct and pay PAYE tax and Class 1 NICs using your usual payroll
procedures
Work out the value to use
The value to use is the amount reimbursed or otherwise provided to
the employee.
Exceptions
There are no reporting requirements and you
have no tax or NICs to pay if you reimburse an employee for any of the
following:
- periodic medical checks or health screenings that take place no
more than once a year
- eye tests required by health and safety legislation for employees
who are required to use a computer screen or other VDU
- glasses or contact lenses that you’re obliged to provide because
an eye test required by health and safety legislation shows them to
be necessary for VDU work - as long as the glasses or lenses are only
used for VDU work
- medical treatment outside the UK when the need for the treatment
arises while the employee is working for you overseas - provided you’ve
committed in advance to be responsible for medical costs incurred
by the employee in these circumstances
- medical treatment or insurance solely related to injuries or diseases
that result from the employee’s work
For detailed information on each of these exceptions, see the ‘Technical
guidance’ section below.
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Where to report - understanding the £8,500 threshold
It’s important to choose correctly between forms P11D and P9D for each
employee. The form to use depends on the whether the employee is a director
of your company and on whether their earnings are above or below an
annual rate of £8,500. For more information - including details of what’s
included in the £8,500 threshold - follow the link below.
End-of-year forms at a glance
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Technical guidance – pages from our manuals
EIM01550: Employment income
- medical expenses and insurance
EIM21760: Particular benefits
- medical expenses, treatment and insurance
EIM21770: Operational risk
injuries and occupational diseases
NIM02145: Class 1 NICs -
eye tests and the provision of glasses
NIM02270: Class 1 NICs -
payment of bills
NIM05688: Class 1 NICs -
medical expenses when working outside the UK
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