Employers pay Class 1A National Insurance at 15% of the health insurance premiums they provide as a benefit in kind. A £1,000 annual premium costs the company £150 in Class 1A; a 10-person scheme at £5,000 total costs £750. It's declared on the P11D(b) and must be paid by 22 July after the tax year.
- ✓Class 1A NIC is 15% of the total benefit value — £150 on a £1,000 annual premium.
- ✓It's declared once a year on the P11D(b) and paid by 22 July (19 July by post).
- ✓Class 1A is an employer cost only — employees never pay it — and it's generally corporation tax deductible.
What Class 1A NIC is and why health insurance triggers it
When a company pays private medical insurance premiums for employees or directors, the cover is a benefit in kind. The employee pays income tax on the value — but the employer also owes Class 1A National Insurance on it, at 15% of the benefit. It's the employer-NIC equivalent for benefits rather than cash pay, and it applies to health insurance premiums in full.
Class 1A is an employer-only charge. Nothing is deducted from the employee's pay for it, and benefits in kind don't attract employee Class 1 NIC at all. The employee's cost is income tax only, usually collected through their tax code — our BIK worked examples guide covers that side of the maths.
Health insurance is usually the biggest Class 1A line in a small company's P11D(b), but the same charge applies to most other benefits in kind — company cars, private fuel, gym memberships and similar — so the form totals them all together. Cash pay, by contrast, attracts Class 1 NIC through payroll; the two systems run in parallel and never offset each other.
The calculation: 15% of the benefit value
The benefit value for health insurance is generally the premium the company paid for each person's cover during the tax year, less any amount the employee was required to contribute and actually paid. Family cover paid by the company counts in full on the employee's benefit. Add everyone's benefit together, multiply by 15%, and that's the company's Class 1A bill.
| Annual premium per employee | Class 1A per employee (15%) | 10-employee scheme total | Class 1A on the scheme |
|---|---|---|---|
| £600 | £90 | £6,000 | £900 |
| £1,000 | £150 | £10,000 | £1,500 |
| £5,000 | £750 | £50,000 | £7,500 |
The £600 row is roughly a basic employee-only plan at £50 a month; £1,000 is a fuller mid-range plan; £5,000 is executive-level or family cover for a director. Note the rate rose from 13.8% to 15% in April 2025, so older worked examples you find elsewhere may understate the bill. There's no threshold and no allowance — the Employment Allowance doesn't reduce Class 1A — so the charge applies from the first pound of benefit.
One consolation: the Class 1A itself, like the premiums, is generally an allowable expense for corporation tax. At the 25% main rate, that £1,500 Class 1A bill on a 10-person scheme effectively costs £1,125 after relief.
Reporting it: the P11D(b)
Class 1A on health insurance is declared once a year on form P11D(b) — the employer's declaration that sums the benefit values from all the individual P11Ds and states the total Class 1A due. Both the P11Ds and the P11D(b) must reach HMRC online by 6 July following the end of the tax year.
- One P11D per covered employee. Each shows that person's premium value in the private medical section.
- One P11D(b) for the company. It totals every benefit and applies the 15% — this is the form that creates the Class 1A liability.
- Ask your insurer for a per-member premium split. Most produce one on request; get it in May so the June filing isn't a scramble.
- File even if you've payrolled the benefit voluntarily. Payrolling currently removes the P11Ds but not the P11D(b) — Class 1A is still declared and paid annually.
A late P11D(b) attracts penalties of £100 per 50 employees (or part-batch) for each month or part-month outstanding. The full calendar, including what to do if you've missed it, is in our P11D deadlines guide.
Price the scheme, Class 1A included
Paying it: the 22 July deadline
The Class 1A payment must have cleared with HMRC by 22 July following the tax year if you pay electronically, or 19 July if you pay by post. These are cleared-funds deadlines, not sending deadlines — and when the 22nd falls on a weekend or bank holiday, the money needs to arrive by the last working day before it.
Use the payslip HMRC issues after your P11D(b), and note that Class 1A has its own payment reference — your normal PAYE reference with an extra suffix for the tax year. Paying it against your ordinary monthly PAYE reference is a classic error that triggers chase letters even though the money has been sent. Late payment accrues interest from the due date, with percentage penalties possible the longer it stays unpaid.
What changes with payrolling in April 2027
From April 2027, payrolling of benefits in kind becomes mandatory: the income tax on health insurance moves into real-time payroll, and HMRC's plan is for Class 1A to be calculated and collected in-year through payroll too, rather than settled in one July payment. The annual P11D(b)-and-22-July cycle described above runs until then, with the final round expected to cover the 2026/27 tax year.
The rate and the base don't change — it's still expected to be 15% of the premium value, just paid as you go instead of in arrears. Cashflow-wise that's slightly worse (you pay sooner) but it removes the risk of the forgotten July bill. Our payrolling benefits 2027 guide covers the transition in full. Details of the in-year Class 1A process are still being finalised by HMRC, so treat the mechanics as provisional.
Frequently asked questions
What is the Class 1A National Insurance rate on health insurance?
15% of the benefit value — generally the premium the company paid for each employee's cover during the tax year. The rate rose from 13.8% to 15% in April 2025. A £1,000 annual premium therefore costs the employer £150 in Class 1A on top of the premium itself.
How do I calculate Class 1A NIC on our health insurance scheme?
Add up the premiums paid for every covered employee (including any family cover the company funds), deduct required employee contributions actually paid, then multiply by 15%. A 10-person scheme at £1,000 a head is £10,000 of benefit and £1,500 of Class 1A, declared on the P11D(b).
Do employees pay any Class 1A National Insurance on health insurance?
No. Class 1A is an employer-only charge — nothing comes out of the employee's pay for it, and benefits in kind don't attract employee Class 1 NIC either. The employee's only cost is income tax on the benefit value, normally collected through an adjusted tax code.
When is Class 1A NIC on health insurance due?
It must clear with HMRC by 22 July following the end of the tax year if paid electronically, or 19 July by post. The liability is declared on the P11D(b), due by 6 July. If the 22nd is a weekend or bank holiday, payment must clear by the previous working day.
Is Class 1A NIC on health insurance corporation tax deductible?
Generally yes. Both the premiums and the Class 1A NIC on them are normally allowable expenses for corporation tax, provided the cover is part of employees' remuneration. At the 25% main rate, a £1,500 Class 1A bill effectively costs £1,125 after relief. Confirm treatment with your accountant.
Does family cover increase the Class 1A NIC bill?
Yes. If the company pays for an employee's partner or children, the whole family premium generally counts as that employee's benefit, and Class 1A applies at 15% of the full amount. Company-funded family cover at £2,000 a year creates a £300 Class 1A charge, versus £90 on a £600 single plan.
Do employee contributions reduce Class 1A on health insurance?
Generally yes — amounts the employee is required to pay towards the premium, and actually pays, reduce the taxable benefit and therefore the Class 1A. If cover costs £1,000 and the employee contributes £400, Class 1A is normally due on £600, i.e. £90. Salary sacrificed under an OpRA arrangement doesn't count as a contribution.
Is there any threshold before Class 1A NIC applies to health insurance?
No. Unlike employer Class 1 NIC on salary, there's no per-employee threshold and the Employment Allowance can't be set against Class 1A. The 15% applies from the first pound of premium, so even a two-director company with £1,200 of cover owes £180.
What reference do I use to pay Class 1A NIC?
Your PAYE Accounts Office reference with a four-digit suffix for the tax year and month — HMRC's P11D(b) payslip shows it. Paying Class 1A against your ordinary monthly PAYE reference is a common mistake: the money arrives but isn't matched to the Class 1A charge, generating chase letters.
Will Class 1A NIC on health insurance still exist after payrolling in 2027?
Yes — the charge remains at 15% of the benefit, but from April 2027 HMRC intends it to be calculated and collected in-year through payroll rather than in a single 22 July payment. The last annual-style round is expected to cover 2026/27. Final mechanics are still being confirmed.