Looking after the health of your employees (and yourself) will always be high on your priority list if you own a limited company. You may incur some annual health-related costs as a business, or as an individual.
Some can be paid for through the company without any personal tax charge. Others, including private medical insurance and gym memberships, will usually be taxable benefits. Here are the main expenses to consider.
Health expenses – some basics
Before we look at how these benefits are taxed, here are some fundamental points related to expense claims.
- Ordinary business expenses must have been incurred wholly and exclusively for the company’s trade in order for them to qualify for Corporation Tax relief.
- If your company pays for personal health-related benefits for its directors or employees, HMRC may treat them as benefits in kind, creating an additional Income Tax liability for the individual and a National Insurance bill for the business.
- Your company may still be able to claim Corporation Tax relief on these costs, even if you have to pay personal tax on the benefit.
Health expenses which are usually tax-free
Health screening and annual health checks
You can provide the cost of one health-screening assessment and one medical check-up per employee per tax year without creating a taxable benefit, subject to the usual conditions. These include health assessments offered by private providers, but the exemption does not extend to medical treatment simply because it occurs during a check-up.
Eye tests
If you or your employees use screens (‘visual display units’) as part of your work, the cost of an eye test required under health and safety legislation can be exempt from tax.
From 6 April 2026, the company can also reimburse the cost of a qualifying eye test instead of arranging and paying for it directly.
You can read more in HMRC’s guidance on eye tests and medical checks.
Glasses
You can pay for corrective glasses or contact lenses where they are specifically required for screen work. However, this is one of those ‘dual purpose’ cases. Ordinary glasses worn at work and elsewhere usually won’t qualify for the exemption, although the extra cost of a special prescription for screen use may qualify.
The same applies to qualifying glasses and contact lenses. If they meet the exemption conditions, the company can reimburse the cost.
Cost of medical treatment
If an employee becomes ill or suffers an injury because of their work, the company may be able to cover the cost of treatment without creating a taxable benefit.
There is also a £500 annual exemption for medical treatment to help someone get back to work after an illness or injury. The employee must have been off work, or unfit for work, for at least 28 consecutive days, and the treatment must be recommended by a healthcare professional.
And if an employee is unfortunate enough to fall ill or get injured while working abroad, the company can usually pay for any necessary medical treatment without creating a future personal tax liability for the person.
See HMRC’s list of exempt medical expenses.
Health-related expenses which are usually taxable
As you can see, the list of exempt healthcare costs is fairly narrow. Here are some common expenses your company can pay for, but which will usually create a tax charge for the employee or director.
Gym and health club memberships
There are very clear benefits to corporate gym memberships – you may get some kind of discount, or some ‘extras’ unavailable on personal plans.
However, an ordinary commercial gym membership is normally a personal benefit, even though the employer also benefits indirectly from having healthy employees.
And in most cases, the membership will be treated as a taxable benefit.
The tax treatment depends on how the company pays for the membership, so it’s worth checking with your accountant first. There is also a tax exemption for companies that provide their own sporting facilities for employees, although this wouldn’t normally cover membership of a commercial gym.
Private medical insurance
Again, there are benefits to both company owners and their employees from having medical insurance in place, but the premiums normally create a taxable benefit in kind when the company arranges and pays for cover.
The company can generally deduct genuine employee remuneration costs against its profits, even though the employee pays tax on the benefit. Where the company arranges and pays for the policy directly, it will generally also pay Class 1A National Insurance.
Read HMRC’s guidance on medical insurance reporting and tax. For other company insurance costs, see our guide to insurance and financial expenses.
You might still benefit from paying for health benefits via your company
Despite the tax implications for the company and the individual, you may still prefer to pay for some health costs through your company.
For example, many health insurance providers have corporate policies which may be more generous than personal ones. Once any discount is taken into account, you may find the overall cost compares favourably with buying insurance privately.
The same is true for health club memberships. Most larger gyms actively promote corporate memberships, even for small companies.
In these situations, we suggest you talk to your accountant. The comparative benefits of paying personally versus through the company depend on your tax band, the cost of the policy or membership, and the tax and National Insurance costs involved.
As ever, keep the invoices and supporting paperwork, and make sure the accounts pick up any taxable benefits correctly.
Need more advice? Get in touch.
If you’re unsure whether a medical expense is allowable, or how to record a taxable benefit in your accounts, contact the Integro team.
Click here to get in touch with the Integro team.
You can also read our complete guide to limited company expenses for more information on what your company can claim.
