A Guide to Health Cover for the Self-Employed

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A Guide to Health Cover for the Self-Employed

Why you need private health cover

You may already have life insurance and, possibly, critical illness insurance. Both are good ideas if you´re self-employed - as they offer you the kind of benefit that employees often get through their companies. But arguably they are not as vital as health insurance. If you are ill then you want to be seen quickly, at a hospital of your choice with a consultant you feel happy with and you don´t need the added hassle of arguing about every tiny cost.

If you’re self-employed, you should see health insurance as your back-up should things go wrong. You want things sorted quickly and you want things done the way you want - with health insurance you regain the upper hand. The size and monetary constraints of the NHS mean that you can feel as if you are spiralling out of control as you have no choice but to fit in with its timetable and locations. As a self-employed businessman or woman, you will be pleased to know that you should pay less for your medical cover than an employee. As many of the self-employed work on tight budgets, this is particularly important. And as you won´t get any tax benefits (see box below) cost containment is even more vital.


Taxing Stuff

If you are self-employed, then you will not be able to offset the cost of your health insurance premiums against your profits. However, if you are incorporated - basically this means you have set yourself up as a company and pay yourself through dividends - then you can offset the cost of health insurance premiums against your profits. You will then only have to pay tax on the value of your medical insurance as a benefit in kind which will significantly cut your costs. Before you rush into incorporation, seek the advice of an accountant. There are costs involved and you may have to pay corporation tax which is fiendishly complicated compared with income tax. Also, if you change your mind later and want to ´un incorporate´ it will be costly in both time and money terms. So for most of the self-employed, you cannot get tax relief on your medical insurance - which makes it particularly important to get the right kind of cover at the right price. After all, it´s your money paying for it.



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