By PaySlipCheck Editorial
· Reviewed by PaySlipCheck Editorial Standards Team
· 14 June 2026
· 5 min read
UK private medical insurance (PMI) provided by your employer is a taxable Benefit in Kind. The annual premium — typically £600 (young single) to £2,500 (family + comprehensive) — is treated as additional income. For a higher-rate worker on a £1,200 premium, the annual tax bill is ~£480 (40% + implicit NI position). Even with the tax, PMI is usually worth having as a benefit — the untaxed value of avoided NHS wait times, quicker consultant access, and private treatment routinely exceeds the tax cost.
Verified against 4 official sources · Last reviewed 14 June 2026
Some employers offer PMI via salary sacrifice:
- Gross salary reduced by the premium
- Employer pays PMI provider
- You save Income Tax + NI on the sacrificed slice
- No BiK charge (because you never received it as salary)
Net effect: your take-home reduces by only ~£580–£720 for £1,200 of PMI value.
Not all employers offer this. Ask HR.
When PMI worth it
Yes for: fast access to specialists, elective surgery routes, family coverage
Sometimes no: young single with excellent NHS access + low chronic-condition risk
Value depends on region — private access has bigger delta from NHS wait times in London + South East.
Family cover BiK
Spouse + kids adds to premium — usually £1,800–£3,000. Same BiK treatment. High-rate workers can end up paying £1,000–£1,500/year in tax on family PMI.
In short
UK PMI provided by employer is a BiK. Premium of £1,200 costs £480 tax/year for higher-rate. Salary sacrifice option (where available) makes it dramatically cheaper — often net positive.
Frequently asked questions
How is PMI reported to HMRC?
Employer reports on P11D annually. HMRC adjusts your tax code the following year to collect the tax.
Can I opt out of PMI to avoid tax?
Yes — most employer schemes are opt-in. Assess whether the untaxed value exceeds the tax cost.
Do I pay NI on PMI?
Employees no. Employers pay Class 1A NI at 13.8% on the premium.
What if I use PMI heavily one year?
No effect on BiK — you're taxed on the premium value regardless of usage.
What about excess/co-pay?
The excess/co-pay you personally pay is NOT taxable — only the employer-paid premium.
What is a P11D — The UK P11D form is submitted annually by employers to HMRC reporting all Benefits in Kind provided to employees. You get a copy showing your total BiK for the tax year. HMRC uses this to adjust your tax code and collect BiK tax.
More on related topics
Childcare vouchers — UK childcare vouchers closed to new joiners in October 2018 — existing users can continue. Tax-Free Childcare replaced it (£2,000/child/year government top-up). This guide covers both + which is better for your situation.
Company car tax — UK company car BiK tax is calculated as list price × emission-band % × your marginal Income Tax rate. Electric cars sit at 3% BiK for 2026/27 (rising 1% per year), making them exceptionally tax-efficient. This guide covers the maths + when a company car beats a car allowance.
Company car vs allowance — UK company car is better than cash car allowance for electric vehicles (3% BiK) at higher-rate tax. Cash allowance is better for petrol/diesel cars at higher-rate. This guide covers the specific numbers.
Salary sacrifice — An arrangement where you give up part of your gross salary in exchange for a non-cash benefit (most commonly pension contributions), reducing your Income Tax and National Insurance.
Sources
All figures on this page are sourced from official UK government publications.
We don't cite secondary commentary or other calculator sites.
All tax figures on this page use the same configuration that powers our
calculators — see our
editorial standards for the review process.
Last reviewed: 14 June 2026.
Next review due 14 December 2026.
Disclaimer: This page provides general information based on published HMRC and gov.scot figures. It is not personal tax or financial advice. For your specific situation, please consult a qualified accountant or contact HMRC directly.