Medical Benefits Through your Business
HMRC does allow certain health benefits to be provided tax free, but there are a few important things to remember. So let’s look at what your company can pay for, what’s exempt, what’s taxable, and how to do it cleanly.
Quick reminder: “The company can pay” doesn’t always mean “tax free”
HMRC’s starting point is that medical or dental treatment and insurance provided by an employer is reportable and taxable unless an exemption applies.
You do have to report medical or dental treatment or insurance provided via salary sacrifice arrangements.
For a small business, you usually want one of these outcomes:
Tax‑free benefit (best outcome) – where HMRC has a clear exemption, or
Taxable benefit, done properly – you can still provide it, but it needs the right payroll or P11D treatment.
So let’s look at the details.
1) What health benefits are exempt (tax free) according to HMRC?
These are the most common exemptions that small businesses can use.
A) One health screening and one medical check‑up per employee per tax year
HMRC says you don’t have to report or pay tax or NIC on periodic medical checks or health screening, but only one of each per year is exempt.
HMRC also sets out what they mean by these terms (helpful if you’re booking something privately):
A health screening assessment is to identify employees who might be at particular risk of ill health.
A medical check‑up is a physical examination by a health professional for the purpose of determining the employee’s state of health.
You don’t have to do a screening before a check‑up for the exemption to apply.
Medical checks connected to treatment are not covered by this exemption.
Small business reality check:
If you want to fund an annual “health MOT”, keep it to up to one health screening assessment and up to one medical check‑up per employee per tax year, and keep it clearly in screening or check‑up territory (not treatment).
One more important point: if the company pays for check‑ups for a spouse or partner who is not an employee, HMRC treats that as a taxable benefit on the employee (unless the spouse or partner is also an employee).
B) Eye tests and screen glasses (where required for screen work)
HMRC lists eye tests as exempt if they are required by health and safety legislation for employees who use a computer monitor or other screen.
They also cover glasses or contact lenses where they’re needed solely for screen or monitor work (subject to the conditions set out in the guidance).
From 6 April 2026, HMRC treats flu vaccinations as exempt where you provide them or reimburse the cost (as long as it’s not via salary sacrifice).
Practical tip:
If glasses are for general everyday use, HMRC’s exemption is much narrower. It’s aimed at the special corrective appliances needed solely for screen work.
C) Flu vaccinations
HMRC says flu vaccinations are exempt if you provide them or reimburse the cost.
HMRC has also published a policy update confirming an exemption for both direct provision and reimbursement of flu vaccinations with effect on and after 6 April 2026.
Practical tip:
This is one of the simplest staff benefits you can provide in a small company because HMRC explicitly lists it as exempt when done correctly.
D) Medical treatment to help someone return to work (up to £500)
HMRC lists an exemption where you pay up to £500 for medical treatment to help an employee return to work, as long as the conditions are met.
Key conditions highlighted by HMRC include:
The employee must have been assessed as (or expected to be) unfit for work due to injury or ill health for at least 28 consecutive days, or have been absent for at least 28 consecutive days.
The treatment must be recommended in line with HMRC’s rules, including a written recommendation provided to both the employer and employee, and made by a healthcare professional as part of occupational health services.
The exemption is capped at £500 per employee per tax year, and any excess is taxed in the normal way.
It does not apply where the treatment is provided under salary sacrifice arrangements.
Practical tip:
This is best thought of as “return‑to‑work support”, not general private treatment cover.
2) What’s usually taxable (but still possible to provide)
This is the area most directors want clarity on: private medical insurance and most treatment costs.
Private medical insurance (PMI)
HMRC’s general position is that if medical or dental insurance you provide isn’t exempt, you must report it, and the tax and NIC treatment depends on how it’s paid.
Paying for treatment (not covered by an exemption)
HMRC explains that employer expenditure on medical treatment is generally taxable either as earnings or as a benefit unless a specific exemption applies (such as the return‑to‑work exemption).
3) The part that catches people out: how you pay determines the HMRC treatment
HMRC sets out three common routes, and this matters a lot for director‑run companies.
Option 1: The company arranges and pays the provider or insurer directly
You must:
report it on the P11D, and
pay Class 1A National Insurance on the value of the benefit.
Option 2: The employee arranges it, but the company pays the provider
You must:
report it on the P11D, and
add the value to the employee’s earnings when deducting and paying Class 1 NIC through payroll (HMRC notes different handling depending on the route).
Option 3: The employee pays, and the company reimburses them
HMRC says this counts as earnings, so you must:
put it through payroll and deduct PAYE tax and Class 1 NIC.
Plain English:
If you pay personally and “claim it back”, HMRC treats that as salary.
A quick note on “small perks” (trivial benefits)
Not everything needs to be a medical policy. HMRC also has the concept of trivial benefits: small, non‑cash benefits costing £50 or less that aren’t contractual and aren’t a reward for work or performance. These don’t need reporting.
If you’re a director of a close company, HMRC caps trivial benefits at £300 per tax year.
That said, for things like flu jabs and annual check‑ups, HMRC already provides specific exemptions, so we normally start with the medical exemptions first.
If you are one of our retainer clients, please let us know if you are planning on using any of these exemptions so that we can account for it correctly, make sure you get the full tax exemption where available, or include the expense properly in your P11D benefit‑in‑kind submission.
If you have any questions please don’t hesitate to contact us.