What are some common health and medical benefits for employees?

There are several health and medical-related benefits an employer may provide in order to improve employee wellbeing, boost productivity, and attract and retain leading talent.

These benefits include:

• Private health insurance


• Dental care and dental insurance


• Gym membership


• Medical treatment


• Mental health cover


• Employee well being initiatives

Is company health insurance a taxable benefit?

HMRC views these business expenses as a taxable P11D benefit in kind. 

An income tax liability usually arises, therefore, if an employer provides medical benefits for employees, whether that’s an insurance policy or the payment of medical treatment. 

Medical insurance coverage policies employers take out on behalf of their employees are taxable benefits, which should be included on a form P11D. This should happen regardless of whether or not it provides cover for members of the employee’s family. Any claim made under such a policy for treatment is not a taxable benefit in itself, as this is met by the insurance company.

Medical treatment costs either met or reimbursed by an employer on behalf of an employee are taxable on the employee as earnings (i.e. income tax and class 1 NI taken through PAYE). If the employer arranges and pays for treatment directly on behalf of the employee, this is a taxable benefit, which you should include on a form P11D.

What are some examples of tax-exempt medical benefits?

Not all medical treatments you provide are fully taxable if you meet certain conditions. The following are common examples of exemptions:

Annual medical check-ups and health screening

Annual medical check-ups and health screenings are generally exempt from tax up to a maximum of one medical check-up and one health screening each tax year.

To be exempt, health screenings must be available to all employees. Medical check-ups must be available to all employees or those identified as requiring a medical check-up during a health screening.

Eye tests and VDU-related prescriptions

Eye tests and visual display unit (VDU)-related prescriptions are generally exempt from tax.

Any eye tests are fully exempt for employees who are required to use a VDU. Glasses or contact lenses solely for the use of the VDU during their official duties are also fully exempt.

Where glasses or contact lenses are needed generally as well, only the proportion of the cost relating to the VDU use is exempt. These exemptions apply regardless of whether the employee or employer pays for the eye test, glasses or contact lenses.

Overseas medical expenses

Overseas medical expenses incurred or reimbursed by an employer or insurance against such treatment overseas are exempt from tax if the need for treatment arose outside the UK and the employee was overseas to perform their employment duties.

Recommended medical treatment

If the company pays for medical treatment, the first £500 of these costs will be exempt if the employee has:

• Been declared unfit for work, in writing, by a healthcare professional* (or will be unfit for work) because of injury or ill health for at least 28 consecutive days; 
• Or been absent from work because of injury or ill health for at least 28 consecutive days.


*A health care professional means a registered medical practitioner, a registered nurse, or an occupational therapist, physiotherapist or psychologist registered with a relevant regulatory body.

Operational risk injuries and occupational diseases

Any medical treatment paid by the company because of an injury that is the result of a particular operational or occupational risk will be an exempt benefit in kind if:

• it is a risk of the employee’s occupation


• the cause of the injury is reasonably attributable to the nature of the employment


• the risk is not common to everyone.

The example HMRC uses for this is a footballer breaking their leg at work. Unfortunately, HMRC would view that pain caused by sitting at a desk isn’t a risk of your occupation, as it is common to sit at desks regularly at home, too.

Grants for employers of disabled employees

There are grants available for employers who need to make adaptations for disabled employees. It can help pay for equipment, adapt existing equipment, pay extra travel costs, support workers, etc.

Under certain conditions, the grants can cover 100% of the costs. When cost sharing applies, the grant will cover up to 80% of approved costs up to £10,000 and up to 100% of approved costs over £10,000 (up to a total cap of £69,260 for YE 31/03/2025).

An employee can apply for the grant via the GOV.UK website: Access to Work: get support if you have a disability or health condition . They will receive a phone call to discuss their specific situation, so they must read the eligibility criteria before applying.

Conclusion

Whether you want to provide health insurance and medical care to improve employee wellbeing, boost employee morale or make your remuneration packages more competitive, it’s important to understand the tax implications for your business. 

Here at Rickard Luckin, we have the tax expertise and experience to highlight which medical benefits are tax exempt and which should be included on a form P11D. Speak to our specialists today for more information on how we can help.

Disclaimer: This blog post is for general information only and should not be construed as tax advice. Please call us for personalised guidance on your specific situation.