There are lots of perks associated with self employment. You can choose to work from any location, go on holiday whenever you want to and you don’t have to report to a line manager. On the flip side, you don’t get paid holiday benefits, and you can’t sign up for employer-sponsored health insurance. But can independent contractors get health benefits via a different route — and if so, how?

In this guide, we’ll examine whether or not you can get health insurance on your own or via a regular client. We’ll also look at how IR35 rules might come into play. 

  • Health benefit basics
  • What are off-payroll working rules?
  • Can independent contractors get health benefits?
  • Can I pay for my own health benefits?
  • Can my limited company pay for my health benefits?

Health benefit basics

Many people in the UK go without private health insurance. They visit National Health Service providers instead, and receive medical care from doctors, nurses and other health professionals employed by the NHS. By and large, this works well — but there are good reasons to pay for private health insurance, too:

  • Reduced waiting times within the private healthcare system
  • Access to treatments not currently offered by the NHS
  • The ability to select a preferred surgeon or hospital
  • Quick access to physiotherapy
  • Swift specialist referral and specialist treatment
  • A private room

What are off-payroll working rules?

Off-payroll working rules, also called IR35 rules, are meant to level the playing field from a tax perspective. In the past, some contractors formed limited companies to ‘disguise’ themselves and reap the tax benefits of an incorporated status. From April 6th, 2021, anyone in the public or private sector deemed to be working as the equivalent of an employee must pay the same taxes as an employee.

In simple terms, IR35 rules are meant to stop people pretending to be companies when they really aren’t. If you operate ‘inside IR35’, that means you have to pay the same taxes as an employee. This might happen if you work mainly for one client, rather than several clients, and if you usually self-identify as a contractor working for your own limited company.

If you operate ‘outside IR35’, that means you can pay yourself a salary and also draw dividends from your company. You’ll probably have business insurance and a professional website, and you’ll most likely work for several clients, rather than one main client. 

It’s your client’s responsibility to determine whether you fall inside or outside IR35 rules. The upside of working inside IR35 is that you’ll be entitled to employee benefits — maternity pay, or sick pay for example. If you’re working inside IR35 and you plan to continue to do so, you may also be able to sign up for your primary client’s private health insurance scheme — but this is not a given. 

Can independent contractors get health benefits?

In a word, yes, independent contractors can get health benefits. If you work within IR35, your primary client must add you to their company payroll to avoid being held liable for any additional taxes you have to pay. If they agree, you may be able to sign on to the company’s employer-sponsored healthcare plan. It’s important to note that private health insurance isn’t a statutory right for employees, so your primary client isn’t obliged to let you join their scheme.

Can I pay for my own health benefits?

You can certainly pay for health benefits if you’re self employed or if you provide services via a legitimate limited company. In fact, any eligible person in the UK — regardless of their employment status — can enroll in a private healthcare plan. 

If you decide to take this route, you can compare health insurance premium costs and features on a comparison site. You can also buy your coverage directly from a health insurance provider — Bupa Healthcare, AXA PPP Healthcare or Aviva Healthcare, for instance. 

Lots of things, including your age, your health status, the coverage limits you choose — even your postcode — can affect your premium price. You’ll generally pay less in total if you buy your health insurance on an annual basis, rather than opting for monthly payments.

Can my limited company pay for my health benefits?

If you operate a legitimate limited company, you can buy an individual healthcare policy for yourself through the business. If you decide to hire employees later on, you can create a group health insurance scheme. 

This can be a pretty tax-efficient way to get private health insurance: the portion of your insurance premium paid by your limited company is an allowable business expense, which you can offset against the corporation tax you owe. HMRC does consider private health insurance plans a P11D benefit in kind, though, so you might owe additional personal tax on the premium payment.

Keeping your business finances in good shape 

Private health insurance is a personal choice — some people go for it, while others use the NHS exclusively. If you’re wondering whether to buy a personal health plan, or whether to set up a health insurance scheme via your company, you might want to track outgoing expenses to see if you can afford the premiums.

You can monitor your business finances quickly and easily with the Countingup app. When you sign up for a Countingup business current account, you receive free accounting software that gives you profit and loss insights at the touch of a button, the ability to digitally record and automatically categorise expenses, and send bookkeeping data to your accountant in seconds. Find out more here.