Hi I currently have the health system and projectile for the player set up and everything.
However I do not know how to let the game know if its colliding with the player or the projectile.Currently using the OnHit event but it only works for one object?
Not sure what you mean with just one object, personally I did it like this:
The OnHit needs to be on the projectile, when the projectile notices it collides, it will tell whatever it collided with to call their reaction, for example with an interface call so you can implement different reactions to the impact depending on whatever was hit.