Adding a private medical insurance (PMI) scheme to PayFit allows you to track benefits and report them to HMRC. It allows employees to see the cost of their employer-provided benefits and any contributions they make towards their scheme.
Feature overview
✅ Monthly private medical insurance premiums appear as a Benefits value under the employer costs section of the payslip.
✅ Employee contributions towards the scheme show as a deduction on the payslip.
✅ You can process private medical insurance schemes as a monthly value, or an annual value at the end of the tax year.
✅ You can separate employee contributions towards dependents as a separate deduction on their payslip.
✅ PayFit can generate and submit your P11Ds and P11D(b) to HMRC.
✅ Private medical insurance can be added per employee or in bulk.
✅ Make corrections to payrolled private medical insurance when an employee leaves the scheme mid-month or mid-year.
Note: In PayFit, you are only able to report private medical insurance monthly or annually. You can't have one annual scheme and one monthly scheme. If you need to add monthly values for one scheme, both schemes will need to be entered monthly.
Enable PMI as a benefit
From the left, choose Company settings, then Benefit settings.
Under the General settings section, click Set benefits preferences.
Answer each of the questions, then click Save.
From the left, choose Company settings, then Benefit settings.
Under the General settings section, click Activate benefits schemes.
Enable Private medical insurance, then click Save.
Set up a PMI scheme
From the left, choose Company settings, then Benefit settings.
Under the Private medical treatment or insurance section, click Set scheme preferences.
Enter the scheme name(s), i.e. Vitality, Bupa.
For each scheme, select whether the scheme is payrolled, i.e. the employee pays tax in real-time through the payroll or if it is reported via P11d at the end of the year.
If your employees contribute towards the scheme, you should choose the monthly option.
If you need to add a second scheme, you can toggle the option to set up a second private medical or insurance scheme.
Note: You must be formally registered with HMRC to payroll benefits.
Adding employees to the PMI scheme
From the left, choose Benefits in kind, then Private medical treatment or insurance. If you only have private medical insurance enabled, simply choose private medical treatment or insurance from the left.
Follow the instructions below depending on whether you'd prefer to add employees to the scheme one at a time, or in bulk.
Tip: If your employees contribute towards the scheme or your PMI schemes are payrolled, you need to enter the values on a monthly basis.
Adding employees one at a time
Choose whether you'd prefer to enter monthly values or Annual values below.
Monthly values
1. From the Table view drop-down, choose Monthly values.
2. Use the Search for an employee box to find the relevant employee.
3. In the table below, next to the employee's name, click Edit.
4. Toggle on the Subscribe <employee name> to Private medical insurance scheme option.
5. In the Employer cost field, enter the full employer premium, i.e. the total amount paid to the PMI provider.
6. If the employee contributes towards the cost of the scheme, enter the Monthly amount contributed by employee.
This is displayed as a deduction on the employee's payslip.
7. If the employee pays towards the cost of including dependents in their PMI scheme, toggle on the Employee is also contributing towards dependents, then enter the Number of dependents and Monthly amount contributed per dependent.
Tip: If you don't know the cost per dependent, enter the number of dependents as 1, with the total monthly amount contributed towards all dependents.
This is displayed as a separate deduction on the employee's payslip.
8. Click Save.
Annual values
1. From the Table view drop-down, choose Year-To Date values.
2. Use the Search for an employee box to find the relevant employee.
3. In the table below, next to the employee's name, click Edit.
4. Toggle on the Subscribe <employee name> to Private medical insurance scheme option.
5. In the Year-To-Date employer cost field, enter the full employer premium for the tax year.
6. Click Save.
Adding employees in bulk
Choose whether you'd prefer to enter monthly values or Annual values below.
Monthly values
1. From the Table view drop-down, choose Monthly values.
2. Click Edit monthly values.
3. Click Download a template.
4. Complete the downloaded template as follows:
Tip: You can delete employees from the template if you don't want to include them, or you can leave them on the template with no changes.
Column A - ID: Do not change
Column B - Name: Do not change
Column C - Subscribe to PMI: Enter Yes.
Column D - ER cost: Enter the full PMI premium for the month. This includes any costs of dependents. It's the total value that both employer + employee pay every month.
Column E - EE cost: Employee's contributions to be deducted via the payroll (net deduction, after tax and national insurance).
5. Save and close the template, then drag and drop it into the 2. Upload your filled-in file page.
6. Click Import data, then Yes, finish import.
Annual values
1. From the Table view drop-down, choose Year-To-Date values.
2. Click Edit yearly values.
3. Click Download a template.
4. Complete the downloaded template as follows;
Tip: You can delete employees from the template if you don't want to include them, or you can leave them on the template with no changes.
Column A - ID: Do not change
Column B - Name: Do not change
Column C - Subscribe to PMI: Enter Yes.
Column D - Year-To-Date employer cost: Enter the full PMI premium for the tax year.
5. Save and close the template, then drag and drop it into the 2. Upload your filled-in file page.
6. Click Import data, then Yes, finish import.
Making corrections to private medical insurance
PayFit has a feature that allows you to make corrections to private medical insurance that has been processed in previous months. This could happen, for example, if an employee’s subscription should have been changed or stopped but was missed, or reported late. This applies to both P11d & payrolled private medical insurance.
To correct private medical insurance
Navigate to your employee record then click on pay items.
Scroll down to the benefit in kind section then click edit on the private medical insurance (this may have another name based on your description) option.
Toggle off the ‘subscribe to private medical insurance’.
Click on the toggle next to ‘amend subscription in the past’.
In the section that appears, enter the date that the subscription ended or needs to be amended. In the table, the amount to be corrected will appear.
If the amount that is displayed for the table is not correct due to the employee change happening mid-month, you can enter the difference into the boxes below ‘make amendments’ and then click save.
Note: You must enter the difference between the amount calculated in PayFit & the amount you want it to be.
For example: If the total employer cost is £85, and it should be £65, enter 20.
If the total employer cost is £85, and it should be £100 enter -15.
You can view the employee payslip and see the amendment under the benefits in the top left and if the employee contributes, under their deduction section as well.
The total of taxable pay & tax paid is also corrected and reflected in the current payslip.
Frequently asked questions
How is PMI displayed on the employee's payslip?
How is PMI displayed on the employee's payslip?
You can see the employer's contribution to the private medical insurance in the top right corner of the payslip, in the employer contribution section, listed as Benefits (this value includes other benefits too, e.g. gym memberships).
Any amount that the employee contributes towards the scheme shows as the PMI description name (e.g. Vitality) in the deductions section.
Can an employee contribute towards PMI using salary sacrifice?
Can an employee contribute towards PMI using salary sacrifice?
If the employee's contribution is taken before tax and national insurance, this amount cannot be reported as an amount made good. Therefore, the full premium value will be reported as a taxable benefit and the employee will pay tax.
The full value is also reported as subject to Class 1A national insurance on the P11D(b) so the employer doesn't save any money.
However, there is an NI saving for the employee as the value has been deducted before tax and national insurance, reducing the employee's NI'able pay.
As an example, the employer pays a total of £100 to Vitality each month, the employee contributes £25 deducted as a salary sacrifice deduction entered within the Pay Items tab. The full £100 is entered as an employer cost, with no employee contributions deducted after tax. Therefore, payroll benefit, or value reported on the P11D, is the full £100 premium.
How do I calculate the employer cost?
How do I calculate the employer cost?
The employer cost is the total value paid to the PMI provider, including the employee's contributions towards their own scheme, or the cost of their dependents.
The value that is then payrolled, or included on the P11D, is calculated as the employer cost, minus any contributions made by the employee. Contributions made by the employee must be deducted after tax so they can be reported as an amount 'made good'. This means the employee has paid tax on this amount already, so doesn't need to pay tax again. The remaining cost of the benefit is what is left to pay tax on.
As an example, the employer pays a total of £100 to Vitality each month, and the employee contributes £25, which is entered as an employee contribution within the Benefits section of the app, so is deducted after tax.
On the P11D, the total benefit amount is reported as £100. The amount made good is reported as £25, and the taxable value is the remaining £75.
For a payrolled benefit, the employer contribution section on the payslip shows the remaining £75, and the employee pays tax on the additional £75 per month.