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Health Insurance for Contractors

A recurring question asked is can my company take out a corporate health insurance policy for me as an employee, or should I take out the insurance policy and the company pay the premiums on behalf of the employee.

Generally, a corporate health plan is cheaper than several individual health plans, but that would depend on the number of employees involved and their ages. The cost of the corporate policy must be divided between the employees covered and reported as a benefit in kind on their P11D forms. The company will pay class 1A national insurance contributions (NIC) at 13.8% on the value of the P11D reported benefit, and each employee will pay income tax on the reported value of the health plan.

If the company pays the premiums for the personal policies of the employees, those amounts are taxed as additional pay of the employees. Thus the company must pay class 1 NIC due from employers at 13.8%. The employees must pay income tax, as well as the employees’ NIC at 12% on the amount paid for the policy premiums. The employer’s class 1 NIC may be off-set against any available employment allowance (worth up to £2,000 per business) for the year.

For more information contact Craig Barlow at Pure Contractor Accountants on 01942 403306

www.purecontractoraccountants.co.uk