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Looking after the health of your employees (and yourself) will always be high on your priority list if you run a limited company. You may incur some annual health-related costs as a business, or as an individual.
Here, business industry veteran, James Leckie, looks at the typical health and medical expenses you may encounter as a company owner, and which ones you can legitimately offset against your company’s Corporation Tax bill.
James runs a number of industry news sites, including IT Contracting and Limited Company Help.
Before we start, there are several fundamental points on expense claims.
In general, these expenses can be legitimately offset against your company’s Corporation Tax bill:
You can claim for the cost of an annual health check up for directors and employees – such as those provided by BUPA.
According to S320A ITEPA 2003, if you or your employees use screens (‘visual display units’) as part of their work, then the costs of eye tests are legitimate expenses.
You can reclaim the cost of ‘corrective glasses’, if they are required for work purposes. However, this is one of those ‘dual purpose’ cases, where unless the glasses will be used only for business purposes, they may not be tax deductible because you’re also using them outside work. The rules are complex, as outlined here.
If you or an employee was injured at work, or developed a medical condition in the workplace, then the costs of treatment would usually be tax deductible.
You can also claim for the cost of medical treatment abroad, if you have been travelling for business reasons.
As you can see, the list of allowable expenses is fairly narrow. Here are some more common expenses that you typically would not be able to claim against your Corporation Tax bill:
There are very clear benefits to corporate gym memberships, however, these costs are not tax deductible, as the benefit is clearly for the individual, even though their employers will also benefit indirectly from having healthy employees.
Again, there are benefits to both company owners and their employees from having medical insurance in place, but this is not a tax-deductible expense.
Despite the tax implications for both the company (not corporate tax deductible) and individuals (benefits in kind), you may still prefer to pay for some health costs via your company.
For example, many health insurance providers (such as WPA) have corporate policies which are more generous than personal ones. You may find that once the discount is taken into account, your company may even be better off from a tax perspective by paying for the premiums via the company.
The same is true for health memberships. Most of the larger gyms actively promote corporate membership – even for small companies.
In these situations, we suggest you talk to your accountant, as the comparable benefits of paying for something personally vs. via the company depend on a number of factors, including which personal tax band you sit within – basic or higher rate.
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