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Employee benefits for small businesses, at your size

Employee benefits for a small business start with one legal duty, a workplace pension, and then whatever cover you choose to add.

The group schemes we checked each publish a minimum size.

This guide shows the size ranges insurers publish for their own products, and how HMRC taxes each benefit.

Every claim here is our summary of a named external source, linked beside it. Sources change: check the wording at the link before you rely on it.

Check your team size ↓Which are taxed →
01 · The minimum

The minimum benefits package for SMEs

The law requires one benefit.

GOV.UK says employers have to provide a workplace pension scheme for eligible staff as soon as their first member of staff starts working for them (GOV.UK ↗).

Everything else is a choice.

Insurance-based benefits do three jobs: financial security for a family, an income during a long time off sick, and help paying for treatment.

02 · Your size

Schemes open to a team your size

Group schemes have minimum sizes, and each insurer publishes its own.

Canada Life offers group income protection and group critical illness for two or more employees (Canada Life ↗); Legal & General's standard group income protection starts from 3 employees (Legal & General ↗).

For a single director or employee, relevant life is single life cover the employer takes out on their behalf (Royal London ↗).

Type the number of people you would cover to see which published ranges include it.

employees

6 of 6 published size ranges include 4

  • Canada Life logoCanada Life group life insurance✓ within its range

    Five or more employees, or two lives or more for its online policies.

  • Canada Life logoCanada Life group income protection✓ within its range

    Income protection for two or more employees.

  • Canada Life logoCanada Life group critical illness✓ within its range

    Cover for two or more employees.

  • Legal & General logoLegal & General group income protection✓ within its range

    From 3 employees on its standard policies.

  • Aviva logoAviva Solutions business PMI✓ within its range

    For businesses with 1 to 249 employees.

  • Bupa logoBupa small business health insurance✓ within its range

    Health insurance for between 2 and 249 employees.

The size ranges each insurer publishes for its own product.

Being inside a range is not an offer of cover: the insurer decides.

Check each at its source: Canada Life ↗ · Canada Life ↗ · Canada Life ↗ · Legal & General ↗ · Aviva ↗ · Bupa ↗.

03 · Tax

Budget and tax-free benefits

We do not publish prices, and the insurers we checked publish no group rates, so your budget is set by the quotes you get.

What is published is how each benefit is taxed.

Employer-paid life cover for any individual or registered charity beneficiary is not a taxable benefit in kind (HMRC ↗), and Royal London says relevant life premiums are not a P11D benefit (Royal London ↗).

The right to insured sick pay is not chargeable (HMRC ↗).

Medical insurance is: the employer reports it on a P11D and pays Class 1A National Insurance (GOV.UK ↗).

Relevant life

Group life

Group income protection

Medical insurance

Taxed on the employee?
Not a P11D benefit, says Royal London (Royal London ↗)
No, for an individual or charity beneficiary (HMRC ↗)
The premium, no (HMRC ↗)
Employer reporting
None as a benefit
None as a benefit
Sick pay through payroll
P11D and Class 1A (GOV.UK ↗)
Company premium
Generally a business expense, says Royal London (Royal London ↗)
May be deductible, says Aviva (Aviva ↗)
May be deductible, says Aviva (Aviva ↗)
Ask your accountant
Swipe to compare

Rows summarise HMRC, GOV.UK and the insurers; tax depends on your facts, so check it with your accountant.

04 · Flexibility

How small businesses can compete with larger employers

A small scheme can still be shaped.

AXA Health says up to 6 categories can be included on a plan, each needing at least 3 lead members, so senior staff can have different cover (AXA Health ↗).

Bupa says you can offer cover for employees' partners or children for an additional cost per person (Bupa ↗).

  • AXA Health

    Different cover by group

    Up to 6 categories, each with at least 3 lead members (AXA Health ↗).

  • Bupa

    Families at extra cost

    Partners or children, for an additional cost per person (Bupa ↗).

  • Aviva

    Health cover from one employee

    Solutions is for businesses with 1 to 249 employees (Aviva ↗).

  • MoneyHelper

    Cash plans

    Routine medical and dental costs, up to a limit (MoneyHelper ↗).

05 · Related

More on each benefit

Each benefit has its own guide.

If the business itself depends on one person, key person cover is owned by and pays the business (Legal & General ↗).

Employee benefits insurance →Relevant life insurance →Life insurance for small business →Small business health insurance →Group income protection →Key person vs relevant life →Business protection insurance →
06 · Sources

Check it for yourself

Every claim on this page is our summary of one of the documents listed here.

We last checked them against the live sources on 28 September 2026.

The documents are the authority, not this page.

Insurers and HMRC update them, so validate any figure or condition at its link before you rely on it.

Questions

Small business employee benefits, answered

We do not publish prices, and the insurers we checked publish no group rates: each scheme is quoted.

What they do publish is how small a scheme can be.

Aviva’s Solutions PMI is for businesses with 1 to 249 employees, Bupa’s small business health insurance for 2 to 249, and Canada Life’s group income protection for two or more employees.

Relevant life covers a single employee or director. Aviva ↗

We do not rank benefits: what suits you is a question for an FCA-authorised adviser.

The facts: relevant life is single life cover an employer takes out and pays for on behalf of an employee or director, paying their family through a trust.

Royal London says HMRC does not treat the premiums as a P11D benefit and that they are generally a business expense if paid wholly and exclusively for the business. Royal London ↗

MoneyHelper describes health care cash plans as schemes where a monthly fee entitles you to have routine medical and dental expenses covered, up to a limit.

It says they are not the same as health insurance, which usually covers new conditions, and that cash plans are a common workplace perk. MoneyHelper ↗

It depends on the benefit.

Employer-paid life cover for an individual or charity beneficiary is not a taxable benefit in kind for the employee.

Employer-paid medical insurance is: it goes on a P11D and the employer pays Class 1A National Insurance on it.

For the company, Aviva says group protection premiums may be tax-deductible as a business expense.

Check your position with your accountant. HMRC policy paper ↗

Beta · information only

Small team, one key person? Size the key person cover.

In a small business one person can carry the profit. The calculator works through the earnings, profit and loan methods UK insurers publish.

01Earnings, profit and loan methods

02Insurers’ published multiples, with sources

03No email, no quote, no sales call

Information, not advice

We are not an insurer, broker or regulated adviser, and we do not give quotes or recommend a policy. For regulated advice, use an adviser authorised by the FCA.

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Not financial advice. This page is general information. Before buying insurance, the FCA tells consumers to check the firm on its Firm Checker (FCA ↗). For free guidance, see MoneyHelper.