Are Private Medical Expenses Tax Deductible UK

Learn whether private medical expenses are tax deductible in the UK for individuals, sole traders and companies.

Private medical care is becoming increasingly popular in the UK, with more people and businesses opting for quicker access to treatment, tailored care and peace of mind. But with rising healthcare costs, many wonder whether private medical expenses are tax deductible.

In the UK, private medical expenses are not tax deductible for most individuals or sole traders. However, businesses can claim tax relief on certain costs when providing healthcare benefits to employees. The rules vary depending on who pays for the expense, how it is structured and whether it qualifies as a taxable benefit.

This article explains the current tax treatment of private medical expenses, the rules for self employed workers and company directors, and what businesses must do to stay compliant if they provide healthcare benefits to staff.

Are Private Medical Expenses Tax Deductible for Individuals?

If you are an employee or self funded individual paying for your own private healthcare, you cannot claim tax relief on the cost. HMRC treats private medical expenses as personal expenditure, even if treatment helps you return to work or maintain your income.

This includes payments for:

  • Private health insurance

  • Consultations or scans

  • Hospital procedures

  • Dental or optical care

  • Alternative therapies such as physiotherapy, osteopathy or acupuncture

These costs are not allowable on your Self Assessment tax return and do not reduce your taxable income. There is also no tax relief available through PAYE or by claiming against employment income.

Even if your condition affects your ability to work or run your business, the cost of private medical treatment remains non-deductible in almost all cases.

What About the Self Employed?

For sole traders and partners, the position is largely the same. Private medical expenses are considered personal benefits, and are not allowable as business expenses.

This applies even if:

  • The condition arose while working

  • The treatment enables you to continue working

  • You are insured under a business-named policy

HMRC does not allow deductions for personal health costs under the “wholly and exclusively for the purpose of trade” rule. Medical treatment benefits you personally, not just your business.

There are only very narrow exceptions. For example, if you arrange a medical treatment policy for your employees and you are not included in the cover, the cost may be deductible as a staff expense. But where the policy includes you as the business owner, the whole cost is generally disallowed.

Limited Companies and Private Medical Insurance

For limited companies, the rules are more flexible. If a company provides private medical insurance to its employees or directors, the company can:

  • Pay for the insurance directly

  • Claim Corporation Tax relief on the cost as a business expense

  • Treat it as a benefit in kind for the employee or director

This means:

  • The company claims a deduction for the insurance premium when calculating profits

  • The recipient (employee or director) is taxed on the value of the benefit

  • The company must report the benefit on a P11D form or via payroll

  • The company also pays Class 1A National Insurance at 13.8% on the value of the benefit

For example:

  • A company pays £1,200 per year for a director’s private health insurance

  • The company claims tax relief on the £1,200

  • The director pays Income Tax on £1,200 (depending on their tax band)

  • The company pays £165.60 in Class 1A NICs

This setup is common in small limited companies where directors want access to private medical care through the business. Even though the benefit is taxable, paying through the company can still be more efficient than paying personally from net income.

Can Companies Provide Tax-Free Medical Benefits?

Some limited medical-related benefits can be provided tax free, as long as strict conditions are met. These include:

1. Annual Health Screenings and Medical Check-Ups
Employers can provide one health screening and one medical check-up per tax year, per employee, tax free. The employee must not be taxed on the benefit and no Class 1A NICs are due.

2. Treatment for Work-Related Injuries or Illness
If an employee becomes ill or injured as a result of their work, the employer can fund medical treatment to help them return to work. This must be:

  • Recommended by a health professional

  • Up to a value of £500 per tax year per employee

  • Part of a formal return-to-work plan

Anything beyond these exemptions must be reported and taxed as a benefit in kind.

Are Medical Expenses for Overseas Work Tax Deductible?

If an employee or director is working overseas, and the employer provides private medical cover for them and their family as part of the overseas assignment, the cost may qualify as a tax-free benefit if certain conditions are met.

This includes policies that cover:

  • Emergency treatment while working abroad

  • Health checks or vaccinations required for overseas travel

However, tax treatment will depend on the exact nature of the arrangement and whether the benefit is necessary for the overseas role. Documentation must be clear, and advice should be taken to ensure proper reporting.

What About Critical Illness or Income Protection?

These are not classed as private medical expenses, but are often discussed in the same context.

  • Critical illness cover pays a lump sum on diagnosis of serious illness

  • Income protection insurance provides regular payments if you are unable to work due to illness or injury

If a company takes out these policies to protect its business, and it is the beneficiary, the cost may be deductible. If the benefit is paid to the employee or director personally, it will likely be treated as a benefit in kind or taxable income.

For sole traders, these policies are generally not deductible, as they benefit the individual personally rather than the business.

VAT on Private Medical Expenses

Most private medical services are exempt from VAT, so you will not usually be charged VAT on medical fees or insurance premiums. That means you cannot reclaim VAT on these expenses, even if you are VAT registered.

However, if you pay for other healthcare-related items that do carry VAT (such as certain therapies or equipment), you may be able to reclaim VAT only if the item is used wholly and exclusively for business purposes. In the case of medical treatment, this is rarely the case.

Keeping Records and Reporting

If your company provides private medical insurance or covers medical costs for employees, make sure to:

  • Keep invoices, receipts and insurance policy details

  • Report the benefit on the annual P11D or payroll benefit system

  • Pay Class 1A NICs on time

  • Record the expense clearly in your accounts for Corporation Tax deduction

For sole traders and partners, avoid including private health costs in your business accounts unless you can clearly separate the cost for other employees. Including personal medical expenses will likely result in an HMRC adjustment if reviewed.

Conclusion

Private medical expenses are not tax deductible in the UK for individuals, sole traders or partnerships. They are considered personal expenses, even if the treatment helps you return to work or manage a work-related condition.

Limited companies can claim tax relief when paying for private medical insurance on behalf of directors or staff, but the benefit is normally taxable on the recipient and must be reported to HMRC.

There are a few narrow exemptions for health screenings and return-to-work treatment, but most private healthcare benefits fall under the benefit in kind rules. If structured correctly, offering private medical cover through a company can still be a cost-effective solution.

Always keep clear records, understand your reporting obligations and, if in doubt, speak to a qualified accountant to ensure you apply the rules correctly.