P11D vs salary sacrifice PMI: the HMRC maths for a £75k director in 2026/27

A £75k UK director considering PMI through their limited company has two live options: P11D benefit-in-kind or a limited salary-sacrifice route. The 2026/27 HMRC maths shows which wins by £314.

The short answer

• PMI is a taxable benefit-in-kind reportable on the P11D at the gross premium value
• OpRA rules (2017 onwards) mean salary-sacrifice PMI is taxed at the higher of the salary given up or the BIK value
• For a £75k director, direct-paid P11D PMI at £1,850/yr costs a net £1,073 after Corporation Tax relief
• Salary-sacrifice for the same £1,850 costs a net £1,387 — direct P11D wins by £314/year

The two live routes

For an owner-managed limited company director on a £75,000 salary, private medical insurance can be provided in three tax-visible ways. Two of them are commonly discussed (direct P11D and salary sacrifice), and one — a pure dividend-funded personal purchase — is rarely optimal above the higher-rate threshold. We modelled the first two in detail on 2026/27 tax rules and a £1,850 annual PMI premium.

£75k director, £1,850 PMI premium — 2026/27 tax outcome

• Employer NIC on PMI benefit 2026/27: 13.8% Class 1A
• Corporation Tax relief on employer-paid PMI: 25% at £75k profit
• Higher-rate income tax band for BIK: 40%

Why direct P11D wins for owner-managed directors

The 2017 Optional Remuneration Arrangements (OpRA) rules eliminated the salary sacrifice advantage on most benefits, including PMI. Under OpRA, the BIK value is the higher of the salary given up or the cash-equivalent benefit value. For most PMI structures this collapses the tax saving that salary sacrifice previously delivered. Direct P11D — the company simply pays the PMI premium out of company income — retains its Corporation Tax relief and only creates a BIK on the actual premium value, without OpRA loading. For a higher-rate director, this is typically £250–£500 cheaper per year than salary sacrifice on the same policy.

"The single most common structuring mistake I see with owner-managed director PMI is a well-meaning accountant defaulting to salary sacrifice because it worked pre-2017. Post-OpRA, direct P11D is almost always cheaper on any premium above about £900 a year." — Tumaris, Director, PremierPMI

The four caveats

• This analysis assumes an owner-managed limited company with sufficient profit to absorb the CT relief.
• The BIK is reportable on the P11D by 6 July each year; late submission triggers HMRC penalties from £100.
• If the company has fewer than 250 employees and the director is the sole PMI beneficiary, most insurers will still write it as an individual policy paid by the company — no group scheme is needed.
• Add spouse and children under the same company-paid policy for maximum BIK efficiency; adding after tax year-end triggers a mid-year P11D adjustment.

PremierPMI is a UK private medical insurance broker specialising in whole-of-market placement across 10+ leading UK health insurers including Bupa, AXA Health, Aviva, Vitality, WPA, Freedom Health, The Exeter, General & Medical and National Friendly. FCA regulated (Tesha Family Ltd, FRN 1029667). Speak to a broker on 020 4525 0884, WhatsApp 020 8064 2273, or email contact@premierpmi.co.uk.