Increasing UK productivity and reducing pressure on the NHS

Research demonstrates that small businesses who invest in their employees’ health and wellbeing or that arrange health insurances for their workforce can significantly improve productivity. 

Expressed another way, an estimated 141.4 million working days were lost in 2018 because of sickness or injury, with the biggest causes being minor illnesses, musculoskeletal problems and mental ill-health.

Accepting the offer of health insurance from their employer creates a taxable benefit for employees. For those on lower incomes, that may create a cost barrier and discourage take up. 

For micro SMEs wishing to offer their employees the cover, the cost of P11D administration in respect of the benefit can also be an obstacle.  


New style health insurance products are designed to be more affordable and to help employees stay healthy and return to work. This relieves the pinch points at the front line of the NHS but attracts income tax for the employee of at least 20%.

In addition, the employer will face administration costs as well as national insurance tax of 13.8% – even though the value of the health benefit can be less than £500 per year.

Fewer than 233,000 UK businesses currently provide a health benefit to their employees and 60% of companies have thought about purchasing health insurance but did not go ahead. We believe if the first £500 of health insurance benefit could be waived from the P11D, at least another 20% of SMEs including sole traders would provide such benefits.

Government already allows a P11D exemption for companies to pay up to £500 for medical treatment to help an employee return to work if they have been unable to work for at least 28 consecutive days. It should consider the same for companies who want to support employees with access to treatment and diagnosis to help prevent long-term absence.


For Government to waive the first £500 of health insurance benefit from the P11D to increase productivity for employers, improve individual wellbeing and reduce pressure on GPs, A&E and NHS waiting lists.


Currently 16 million people are employed by SMEs. Assuming our proposals result in a 20% increase in health insurance penetration of SMEs, this would generate an additional £1.6bn premiums.

This would:

  • Generate £178 million additional IPT revenue
  • We would expect insurers to pay for £1 billion of medical diagnosis and treatment, saving the NHS the equivalent sum 
  • Less estimated £135 million reduction in PIID revenue to HMRC
  • equals a net government gain of £1.043 billion


Ill-health absence and presenteeism costs the UK economy £73bn. Dame Carol Black, an advisor to Public Health England and the Department of Health’s Expert Advisor on work and health, estimates that improved wellbeing in the workplace would improve productivity by 25%. Calculated by:

  • £73 billion productivity is lost by 32million UK employees.
  • 16 million people are employed by SMEs.
  • Improved health insurance penetration (due to the P11D tax break) of 20% applied to 16 million employees means an extra 3.2 million employees would be protected.
  • 3.2 million people represents 10% of UK employees. 
  • 3.2 million people are responsible for £7.3 billion UK lost productivity
  • £7.3 billion multiplied by Dame Black’s 25% productivity improvement factor through uptake of health insurance equals £1.8 billion improvement in productivity in the UK

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