Expenses and benefits: medical or dental treatment and insurance

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1. Overview

As an employer providing medical or dental treatment or insurance to your employees, you have certain tax, National Insurance and reporting obligations.

What’s included

What you need to report and pay depends on:

  • the kind of treatment or insurance you provide
  • whether you pay the provider directly

2. What's exempt

You don’t have to report anything to HMRC or pay tax and National Insurance on certain health benefits.

Salary sacrifice arrangements

You do have to report your employees’ medical or dental treatment or insurance if they are a part of a salary sacrifice arrangement.

Periodic medical checks or health screening

Only one a year is exempt.

Eye tests

These are exempt if they are required by health and safety legislation for employees who use a computer monitor or other screen.

Glasses or contact lenses

These are exempt if you have to provide them for monitor or screen work.

Medical treatment outside the UK

This is exempt if your employee is working for you overseas and needs treatment.

You must have committed in advance to pay, unless you arrange and pay the provider directly for your employee’s treatment or insurance.

Medical treatment or insurance for work only

Only treatment or insurance related to injuries or diseases that result from your employee’s work is exempt.

Medical treatment to help an employee return to work

This is exempt if you pay up to £500 for costs for an employee to return to work.

The employee must have either:

  • been assessed by a health care professional as unfit for work (or will be unfit for work) because of injury or ill health for at least 28 consecutive days
  • been absent from work because of injury or ill health for at least 28 consecutive days

3. What to report and pay

If the medical or dental treatment or insurance you provide isn’t exempt, you must report it to HMRC and may have to deduct and pay tax and National Insurance on it.

You arrange and pay the provider directly for treatment or insurance

You must:

Your employee arranges treatment or insurance, but you pay the provider

You must:

  • report it on form P11D
  • add the value of the benefit to the employee’s earnings when deducting and paying Class 1 National Insurance (but not PAYE tax) through payroll

You reimburse your employee’s costs

This counts as earnings, so:

  • add the payments to your employee’s other earnings
  • deduct and pay PAYE tax and Class 1 National Insurance through payroll

The same rules apply whether you provide your employee with a cash allowance or additional salary to meet medical costs.

4. Work out the value

The value to use is the cost to you of providing the treatment or insurance.

If you reimburse the money to your employee, the value is the amount you reimburse.

Salary sacrifice arrangements

If the cost of the medical or dental treatment or insurance is less than the amount of salary given up, report the salary amount instead.

These rules don’t apply to arrangements made before 6 April 2017 - check when the rules will change.

5. Technical guidance

The following guides contain more detailed information: