Medical or dental treatment and insurance

Our experts tell you what you need to report to HMRC if you provide medical or dental benefits

Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

What do you need to do if you provide medical or dental benefits for your employees?

If you are an employer who provides medical or dental benefits to your employees, either by covering the cost of insurance or the cost of any treatment, you may have to report this to HMRC and there might be additional tax or National Insurance to pay. It all depends on what kind of treatment or insurance you are picking up the costs for and how you pay for it – whether you pay the provider directly or reimburse your employees.

Are there any exemptions?

There are certain health benefits that you can provide to your employees without needing to report them to HMRC, unless they form part of a salary sacrifice arrangement, in which case they will need to be reported.

These exemptions are:

  • Periodic medical checks or health screening are exempt as long as they are only provided once a year
  • Eye tests are exempt as long as they are required by health and safety legislation for those employees who are required to use a computer screen or other kind of screen as part of their job
  • Glasses or contact lenses are exempt as long as they are required for computer screen or monitor work
  • Medical treatment required outside of the UK is exempt if your employee is working overseas on your behalf and needs the treatment. You need to have committed to pay in advance unless you have arranged the insurance or treatment yourself and are paying the provider’s bills directly
  • Medical treatment or insurance required for work only is exempt if the illness or injury is a result of your employee’s work. This means that the risk doesn’t apply to everyone, just the employee undertaking this kind of task. The intention would be to return the employee to the state of health that they enjoyed before the illness or injury
  • Medical treatment which helps an employee to return to work is considered to be exempt but the employee must either have been assessed to be unfit for work (or will be unfit to be able to work) for at least 28 consecutive days or have been absent from work due to illness or injury for at least 28 consecutive days. Any assessments need to have been carried out by a healthcare professional.

How do you report to HMRC and pay?

If the health benefits you provide for your employees aren’t classed as exempt, then you will need to report these benefits to HMRC and you may be required to pay additional tax and National Insurance on them. How you report and what you need to pay depends on the treatment and how you initially provide it.

If you arrange the insurance or treatment and pay the provider directly, you need to report this on your P11D form and you will have to pay Class 1A National Insurance on the value of the benefit.

If your employee arranges the treatment or insurance but you pay the provider directly, you need to report this on your P11D form and add the value of the benefit to your employee’s other earnings. You will then deduct Class 1 National Insurance on these additional earnings through payroll but there will be no extra PAYE tax to be deducted.

If you reimburse your employees costs, HMRC considers this to be extra earnings so the payment needs to be added to the employee’s other earnings and you will deduct PAYE tax and National Insurance on these additional earnings through payroll just as you would their other earnings. This applies whether you give your employee additional salary or cash payments to meet their health benefit costs.

How do you work out the value?

The value you need to report to HMRC is the cost of the treatment or insurance that you provide. If you reimburse your employees for insurance or treatment that they arrange, the value to be reported is the amount that you reimburse your employee.

If these health benefits form part of a salary sacrifice arrangement and the amount of salary given up is greater than the cost of the medical or dental treatment or insurance, you need to report the salary amount instead. This only applies to salary sacrifice arrangements made after 6th April 2017.

How can DSR Tax Claims help?

We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful.  Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

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