Cookie Use

Drewberry™ uses cookies to offer you the best experience online. By continuing to use our website you agree to the use of cookies. If you would like to know more about cookies and how to manage them please view our privacycookie policy.

How is Group Critical Illness Insurance Taxed?

I’ve been looking into providing Critical Illness Cover for my employees, but do I have to pay tax on a Group Critical Illness policy I put in place? I was also wondering about how HMRC taxes Critical Illness Insurance payouts if any of my employees unfortunately need to claim?

Question asked by Mr J Hughes

When you purchase a Company Critical Illness policy, it’s taxed slightly differently from the Critical Illness Cover you’d take out as an individual. When you buy Critical Illness Cover for yourself, you pay for it using income you’ve already paid tax and National Insurance on (i.e. your wages).

How is Business Critical Illness Cover taxed?

However, when an employer takes out this cover on behalf of its employees, Group Critical Illness Insurance is usually considered a business expense you can reclaim against corporation tax.

As well as the premiums being tax-deductible for your company, there’s no income tax on Critical Illness Insurance payouts for your employees, either.

Is Group Critical Illness Insurance a benefit in kind?

It’s important to consider that, for your employees, generally Group Critical Illness Cover is a taxable benefit in kind (p11d benefit). This means they’ll have to pay tax on the premiums you’re paying on their behalf.

This is done via HMRC. HMRC will alter each employees’ tax codes to decrease their personal allowance – the amount they can earn before paying income tax – by a sum equivalent to the value of the Critical Illness Insurance premium you’re paying for them.

Good interaction between client and advisor. Drew knew his brief; articulated and explained the issues clearly and answered questions fully. This all helped me clarify what I wanted and so we agreed on our action swiftly. I am a very satisfied client. Thank you.

Ronald Lofkin
25/07/2019
Compare Top 10 UK Business Insurers
Takes approx. 60 seconds

Or call us on 0208 432 7333

Compare Top UK Insurer Quotes Logos
Contact Us
Head Office & Pensions and Investments
Millennium Bridge House
2 Lambeth Hill
London
EC4V 4GG
Personal Insurance & Accounts Payable
Telecom House
125-135 Preston Road
Brighton
BN1 6AF
Drewberry London Office MapDrewberry Brighton Office Map
Our Core Principles
  • 1You Come FirstWe are a client focused business who always aim to put you first.
  • 2We are ExpertsTo provide you with the best advice, we need to know our stuff!
  • 3We are HumanWe are real people with feelings who are here to help you.
  • 4We are ProfessionalProviding a 5-star service requires a professional approach to everything we do.
  • 5We are here to EducateWe don't believe in sales, we are here to educate so you can make informed decisions.