Health insurance P11D UK — calculator, worked examples & employer guide 2026
P11D health insurance calculator
Estimate the Income Tax and employer NIC impact — 2025/26 rates
Estimated annual tax impact
Estimates only — standard 2025/26 rates. Does not account for salary sacrifice / OpRA, PSAs, Scottish income tax, or individual circumstances. Consult HMRC or a qualified accountant for your specific position.
When is health insurance a P11D benefit?
Health insurance becomes a reportable benefit-in-kind in any of these circumstances:
- Employer pays the insurer directly — the most common scenario. The full premium is a taxable BIK for the employee.
- Employer reimburses the employee — if you pay your own premiums and your employer refunds you, the reimbursement is still taxable as a BIK.
- Salary sacrifice arrangement — most salary sacrifice health insurance is still taxable under Optional Remuneration Arrangement (OpRA) rules. See below.
- Group scheme — even negotiated group rates result in a BIK per employee that must be reported.
How to report health insurance on a P11D
- Calculate the taxable value — gross annual premium paid by the employer, minus any employee contributions. A £1,200 premium with a £300 employee contribution = £900 taxable benefit.
- Report in Section I of the P11D — “Medical treatment, insurance and subscriptions.” Enter the taxable value per employee. Submit via HMRC’s PAYE Online or payroll software.
- Pay Class 1A NIC at 13.8% — report on form P11D(b). Pay by 22 July (online) or 19 July (post) after the tax year end.
- Submit by 6 July — the P11D filing deadline. For 2025/26 tax year: 6 July 2026.
- Give employees a copy — each employee must receive their P11D or be informed of the benefit value for their personal tax return.
Worked examples — P11D health insurance at each tax rate
| Annual premium | Employee contributes | Taxable value | Tax @ 20% | Tax @ 40% | Employer NIC (13.8%) |
|---|---|---|---|---|---|
| £600 | £0 | £600 | £120 | £240 | £83 |
| £1,200 | £0 | £1,200 | £240 | £480 | £166 |
| £1,200 | £300 | £900 | £180 | £360 | £124 |
| £2,400 | £0 | £2,400 | £480 | £960 | £331 |
| £3,600 | £0 | £3,600 | £720 | £1,440 | £497 |
Remember: the employer’s true all-in cost is the premium plus the Class 1A NIC. A £1,200 premium costs the employer £1,200 + £166 = £1,366 per employee per year.
Salary sacrifice health insurance — is it still taxable?
Many employers assume salary sacrifice removes the P11D liability for health insurance. In most cases, it does not.
HMRC treats most health insurance salary sacrifice arrangements as Optional Remuneration Arrangements (OpRA). The taxable benefit value is the higher of: the cash salary given up, or the employer’s cost of providing the benefit. In practice, the full premium value is typically still taxable as a BIK.
Health insurance is not on HMRC’s OpRA exemption list (pensions, cycle-to-work and legacy childcare vouchers are exempt — PMI is not). If you’ve been told salary sacrifice health insurance is “tax-free,” seek a second opinion from a qualified tax adviser before proceeding.
How to manage the health insurance P11D cost
Employee contributions
Having employees contribute reduces the taxable benefit value directly. A £300 employee contribution on a £1,200 premium saves the employee £60/year in tax (basic rate) and the employer £41/year in NIC — per employee.
Switch to a group scheme
Group health insurance is typically 20–40% cheaper per head than individual policies. Lower premiums = lower BIK values = less tax for everyone. If you’re currently reimbursing individual policies, moving to a group scheme is usually the most impactful structural change available.
PAYE Settlement Agreement (PSA)
A PSA lets an employer agree with HMRC to pay all tax and NIC on certain benefits on employees’ behalf. Health insurance can be included in some circumstances — the employer bears the cost but the employee has no personal tax liability. Discuss with your accountant.
Shop at renewal
Premiums increase annually. Each increase raises the BIK value and therefore the tax cost. Comparing Bupa, AXA, Aviva, Vitality and WPA at renewal often produces savings that reduce the taxable value without changing the benefit itself.
FAQs — health insurance P11D UK
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