Is Health Insurance Tax Deductible for the Self-Employed?
If you are already self-employed, you will no doubt know that you are responsible for all of your own tax affairs and that you don't benefit from things such as holiday and sick pay in the way that people in 'regular' employment do.
You will probably also be aware that you are able to claim back certain expenses against your tax, which can be very useful when it comes to the sustainability of your business.
Generally speaking, any expenses that are necessary for your business can be claimed back against your tax.
This includes things such as professional membership fees that are necessary for you to carry out your work.
If you work from home, you can usually claim back heating and electricity costs that are required for your business.
Travel and other expenses can often also be claimed back, as long as you can demonstrate that they were to benefit your business.
However, one type of expense that typically cannot be claimed back is health insurance.
There is quite a lot of misinformation about this on the internet, largely because many of the internet advice sites refer to the US system, where you can claim for health insurance, and not the UK system, where you cannot claim it back.
One of the main reasons self-employed people cannot claim health insurance as a business expense in the UK is because it is not seen as essential to running the business.
This means it is worth thinking carefully before you take out health insurance as you will have to pick up the costs for it yourself; most people in the UK don't have private health insurance as they are covered by the NHS.
However, when you consider that at around 55% of self-employed people would be stuck if they were ill and unable to work because they don't have anyone who could pick up the slack for them, it shows why it can be sensible to have at least some form of medical cover.
For example, many self-employed people look for business insurance that comes with a medical component attached.
This is different to health insurance in that it doesn't pay for any medical care you might need, but it can provide you with an income if you are unable to work for a time due to accident or illness.
This can be a useful alternative, particularly if you are a sole trader and always work alone.
Another issue to consider is if you have employees: in some cases, if you are able to demonstrate that group health insurance benefits the entire business and not just you as the owner, you might be able to claim for at least part of it, depending on the nature of the policy and your circumstances.
This means it is a good idea to seek professional advice before you take out any health insurance policy; this way, you will be able to make sure you get the most appropriate cover for you and will also be able to find out more about whether it is an allowable expense or whether you will be required to pay for it.
You may not be able to offset it as an expense, but at least you will be clear about your responsibilities and what your policy entails.
You will probably also be aware that you are able to claim back certain expenses against your tax, which can be very useful when it comes to the sustainability of your business.
Generally speaking, any expenses that are necessary for your business can be claimed back against your tax.
This includes things such as professional membership fees that are necessary for you to carry out your work.
If you work from home, you can usually claim back heating and electricity costs that are required for your business.
Travel and other expenses can often also be claimed back, as long as you can demonstrate that they were to benefit your business.
However, one type of expense that typically cannot be claimed back is health insurance.
There is quite a lot of misinformation about this on the internet, largely because many of the internet advice sites refer to the US system, where you can claim for health insurance, and not the UK system, where you cannot claim it back.
One of the main reasons self-employed people cannot claim health insurance as a business expense in the UK is because it is not seen as essential to running the business.
This means it is worth thinking carefully before you take out health insurance as you will have to pick up the costs for it yourself; most people in the UK don't have private health insurance as they are covered by the NHS.
However, when you consider that at around 55% of self-employed people would be stuck if they were ill and unable to work because they don't have anyone who could pick up the slack for them, it shows why it can be sensible to have at least some form of medical cover.
For example, many self-employed people look for business insurance that comes with a medical component attached.
This is different to health insurance in that it doesn't pay for any medical care you might need, but it can provide you with an income if you are unable to work for a time due to accident or illness.
This can be a useful alternative, particularly if you are a sole trader and always work alone.
Another issue to consider is if you have employees: in some cases, if you are able to demonstrate that group health insurance benefits the entire business and not just you as the owner, you might be able to claim for at least part of it, depending on the nature of the policy and your circumstances.
This means it is a good idea to seek professional advice before you take out any health insurance policy; this way, you will be able to make sure you get the most appropriate cover for you and will also be able to find out more about whether it is an allowable expense or whether you will be required to pay for it.
You may not be able to offset it as an expense, but at least you will be clear about your responsibilities and what your policy entails.
