Are You Overpaying for Insurance as a Company Director in 2026/27?
- Brian Pusser
- May 12
- 3 min read
Updated: May 19
Published 12 May 2026
If you are a company director paying for life insurance or private medical cover out of your own pocket, you might be missing out on significant tax savings. Many directors do not realise that structuring these insurance policies through their company can reduce their overall tax burden. For the tax year 2026/27, there are clear options that can help you save money while maintaining essential cover.
This post breaks down the key insurance types relevant to company directors, explains their tax treatment, and shows how you can make your insurance more tax-efficient.
Private Medical Insurance (PMI) for Directors
Private Medical Insurance offers fast access to private healthcare, which can be a valuable benefit for company directors. Many directors choose to pay for PMI personally, but your company can also cover the cost.
How PMI Works When Paid by Your Company
Your company pays the PMI premiums directly.
PMI is treated as a Benefit in Kind (BIK).
You pay personal income tax on the value of the benefit.
Your company pays 15% Employer National Insurance Contributions (NIC).
Why PMI Can Still Make Sense
PMI premiums are a deductible business expense for your company.
Corporation tax relief applies, reducing your company’s taxable profits.
Often, PMI paid through the company can be cheaper than paying personally, especially when combined with tax relief.
Example
Suppose your PMI costs £1,200 annually. Paid personally, you get no tax relief. Paid through your company:
The company deducts £1,200 as a business expense.
You pay income tax on the £1,200 benefit value.
The company pays 15% NIC (£180).
Corporation tax relief reduces the company’s tax bill by around 19% of £1,200 (£228).
This means the net cost to the company is lower, and you get quicker access to private healthcare.
Relevant Life Insurance (RLI) as a Tax-Efficient Option
Relevant Life Insurance is a life cover policy arranged by your company for directors or employees. It provides a death benefit to your beneficiaries if you pass away during the policy term.
Key Advantage of RLI
RLI is not treated as a Benefit in Kind.
This means no personal income tax or NIC on the premiums.
The company also pays no Employer NIC on RLI premiums.
Tax Benefits of RLI
No Income Tax on premiums for the director.
No Employee NIC.
No Employer NIC.
Corporation tax relief is available on premiums paid.
Why RLI Can Save You Money
Because RLI premiums are free from income tax and NIC, and the company gets corporation tax relief, this option is often much more tax-efficient than buying life insurance personally.
Example
If your life insurance premium is £1,000 annually:
Paying personally means no tax relief.
Paying through your company as RLI means the company deducts £1,000 from profits.
You pay no tax or NIC on the benefit.
The company saves corporation tax on the premium (around £190 at 19%).
This structure can reduce your overall cost significantly.
Comparing PMI and RLI for Company Directors
Feature | Private Medical Insurance (PMI) | Relevant Life Insurance (RLI) |
Paid by company | Yes | Yes |
Treated as Benefit in Kind | Yes | No |
Personal Income Tax | Yes | No |
Employee NIC | No | No |
Employer NIC | Yes (15%) | No |
Corporation Tax Relief | Yes | Yes |
Main Benefit | Fast private healthcare | Tax-efficient life cover |
How to Review Your Insurance Setup
Many directors are unknowingly paying more than necessary for their insurance. A quick review of your current arrangements can reveal opportunities to save tax and reduce costs.
Steps to Take
Check if your PMI or life insurance is paid personally or through your company.
Calculate the tax impact of your current setup.
Consider switching to RLI for life cover if you currently pay personally.
Discuss with a tax advisor or accountant to tailor the best solution for your company structure.
Final Thoughts
If you are a company director paying for life insurance or private medical cover personally, you could be overpaying. Using your company to pay for these policies can unlock valuable tax savings in 2026/27.
PMI offers a health benefit but comes with some tax costs.
RLI provides a highly tax-efficient life cover option without Benefit in Kind charges.
Review your insurance arrangements now to ensure you are not missing out on savings. A quick consultation can clarify what works best for your situation and help you keep more of your money.
Want to check your position? Reach out for a review tailored to your company’s needs.
