If you’re setting up your own business, you’ll no longer have to answer to an employer or put up with many of the annoyances of being a permanent employee.
But you also lose the workplace perks that sometimes softened the edges of employment.
For people who were lucky enough to receive group medical insurance from their employer, this can be the most significant benefit to do without.
So, what is the best way to take out health insurance if you run your own business?
This guide looks at what private medical insurance is, what it typically covers, how to compare policies, and how to decide whether it’s worth paying for as a self-employed person.
What is private health insurance?
The NHS provides universal healthcare with no extra costs at the point of use. The trade-off can be long waits and limited choice over where you receive treatment.
In some cases, the NHS may not offer the treatment pathway you prefer. NHS waiting time statistics reveal the extent of delays for routine procedures.
Private health insurance gives faster access to diagnosis and treatment and more control over where and when you’re seen.
Depending on the policy, cover may include inpatient and outpatient care in private hospitals, consultations with specialists, and diagnostic tests.
Alongside core treatment, policies may include or offer as add-ons:
- Private accommodation during admission
- Outpatient diagnostics and therapies
- Nursing care
- Overseas emergency treatment
- Virtual GP, optical or dental modules
- Psychiatric support
- Well-being benefits, such as gym discounts
Paying for cover — personally or via your business
Sole traders
If you’re self-employed as a sole trader, premiums are treated as a personal benefit.
HMRC does not allow you to deduct them as a business expense (also read – GOV.UK guidance on self-employed expenses).
The only exception is where treatment is wholly necessary due to a work-related injury or illness, but in practice, this is rare and difficult to prove.
Limited company directors
If you operate through a limited company, the company can pay the premiums. They are treated as a benefit in kind (HMRC: medical insurance as a benefit), which means:
- The individual pays Income Tax and employee NIC on the benefit value
- The company pays employers’ NICs
- No Corporation Tax relief is usually available (tax on company benefits)
This does not mean paying through your company is always a bad idea. Corporate schemes are often priced lower than personal plans, and adding dependants or staff is simpler under a company scheme.
Quick comparison
| Business type | Who pays? | Tax treatment | Notes |
|---|---|---|---|
| Sole trader | Individual | No deduction for premiums; personal purchase | Only very limited, work-caused treatment may be allowable |
| Limited company director | Company | Benefit in kind; employee & employer NIC; no CT relief | Corporate pricing and family or group options may offset tax cost |
Sole trader
Who pays? Individual Tax treatment: No deduction for premiums; personal purchase Notes: Only very limited, work-caused treatment may be allowable
Limited company director
Who pays? Company Tax treatment: Benefit in kind; employee & employer NIC; no CT relief Notes: Corporate pricing and family or group options may offset tax cost
What affects the premium?
Age, medical history and lifestyle are the most significant factors, along with the level of cover you select. Hospital networks, outpatient limits, psychiatric care, excesses, and cancer pathways all influence the cost.
Some insurers offer moratorium underwriting, where recent conditions are initially excluded but may be reinstated after a symptom-free period.
Others use full medical underwriting, where conditions are excluded upfront. Each has pros and cons (MoneyHelper: private medical insurance guide).
How to compare providers
When requesting quotes, make sure you’re comparing like with like. Some useful points to clarify include:
- Which hospitals are included — local only or national lists?
- Outpatient diagnostics and therapy limits
- Cancer care: drugs, radiotherapy, surgery, consultations
- Mental health cover and limits
- Excess level and how often it applies
- Waiting periods before cover starts
- Family or corporate discounts
- Extras such as virtual GP or wellness benefits
Feature snapshot (illustrative)
| Feature | Entry-level | Mid-range | Comprehensive |
|---|---|---|---|
| Hospital list | Local | Regional | National (extended) |
| Outpatient diagnostics | Limited cap | Higher cap | Full cover |
| Mental health | Not included or small cap | Set sessions | Broader pathway |
| Cancer drugs | NHS only | Selected list | Extended list |
| Excess | £250+ | £100–£250 | £0–£100 |
Hospital list
Entry-level: Local Mid-range: Regional Comprehensive: National (extended)
Outpatient diagnostics
Entry-level: Limited cap Mid-range: Higher cap Comprehensive: Full cover
Mental health
Entry-level: Not included or small cap Mid-range: Set sessions Comprehensive: Broader pathway
Cancer drugs
Entry-level: NHS only Mid-range: Selected list Comprehensive: Extended list
Excess
Entry-level: £250+ Mid-range: £100–£250 Comprehensive: £0–£100
Common tax scenarios for medical insurance
| Scenario | Is it allowable? | Why or notes |
|---|---|---|
| Sole trader pays personal premium | ❌ No | Premiums are a personal benefit, not an allowable trading expense (GOV.UK). |
| Ltd company pays director’s PMI | ✅ Yes, but taxable | Permissible company payment, treated as a benefit in kind for the director. Employee pays tax and NIC; employer pays NIC. No CT relief on the benefit (HMRC guidance). |
| Company policy includes spouse/children | ✅ Yes, but taxable | Cover can include dependants. The full benefit value is reportable and taxable on the employee (P11D rules). |
| Treatment after a work accident (sole trader) | 🟨 Rarely | Only if costs are wholly due to the trade and meet HMRC’s tests. Hard to satisfy in practice; seek advice. |
| Cash plan vs full PMI | Varies | Low-cost cash plans may still be a taxable benefit if paid by a company. Benefits and taxes follow the same principles. |
| Switching to corporate scheme mid-year | ✅ Possible | Insurers may allow a move to company-paid cover. Benefit tracking and P11D reporting then apply from the date of the switch. |
Sole trader pays personal premium
Is it allowable? ❌ No Why or notes: Premiums are a personal benefit, not an allowable trading expense (GOV.UK).
Ltd company pays director’s PMI
Is it allowable? ✅ Yes, but taxable Why or notes: Company can pay, but it is a benefit in kind. Employee pays tax and NIC; employer pays NIC. No CT relief on the benefit (HMRC guidance).
Company policy includes spouse/children
Is it allowable? ✅ Yes, but taxable Why or notes: Dependants can be included. Full benefit value is reportable and taxable (P11D rules).
Treatment after a work accident (sole trader)
Is it allowable? 🟨 Rarely Why or notes: Must be wholly due to the trade and meet HMRC tests. Usually difficult; take advice.
Cash plan vs full PMI
Is it allowable? Varies Why or notes: Company-paid cash plans can still be taxable benefits. Same reporting principles apply.
Switching to corporate scheme mid-year
Is it allowable? ✅ Possible Why or notes: Allowed by many insurers. Benefit reporting applies from the switch date.
Example scenarios
Quick access to scans: a 35-year-old sole trader wants fast diagnostics after GP referral. A mid-range plan with outpatient cover and £200 excess balances price with access.
Family plan via company: a 50-year-old director includes partner and child on a company scheme. It is a benefit in kind, but corporate pricing and one renewal date keep things simple.
Frequent travel: a freelancer working part of the year in the EU adds overseas emergency treatment. Premiums rise, but it reflects genuine risk.
Getting advice
Health insurance is a complex subject.
Options like a moratorium versus full medical underwriting, cancer coverage levels, and hospital lists make a significant difference.
An independent adviser can compare providers and explain how paying personally vs via a company affects your tax position.
For many self-employed people, seeking professional advice can save a significant amount of time and prevent costly mistakes.
Get your health insurance quote
Broadbench is our FCA-regulated partner, providing protection for self-employed people.
Your details will only be used to provide your quote and not for any other purpose.
FAQs
Do I need private health insurance if we have the NHS?
The NHS is excellent, but waiting lists are long. Private cover gives faster access and more choice, especially for diagnostics and non-urgent treatments.
Can sole traders claim premiums as a business expense?
No. Premiums are a personal cost (GOV.UK: self-employed expenses). Only very rare, work-caused treatments might be allowable.
If my company pays, does it get Corporation Tax relief?
No. Premiums are taxed as a benefit-in-kind. The director pays tax and NIC, and the company pays employer NIC (GOV.UK: medical insurance benefit rules).
What affects the cost most? Age, health history, level of cover and hospital choice. Wider hospital lists and extended cancer cover are among the most significant cost drivers.
Can I cover my family? Yes. Most insurers offer family or group schemes, often with discounts compared to buying individual cover.