Answered by Michael Englefield
Some types of Group Insurance policies are taxable, yes. Business Private Medical Insurance is an example of this.
These types of policy are known as taxable benefits in kind, or P11d benefits. You pay tax on these as an individual, even though your company is paying for the premiums.
The way P11d benefits work is that HMRC adjusts your tax code to reduce your personal allowance in line with the cost of the premium, so you pay tax on a little more of your income.
Is Company Sickness Cover a P11d Benefit?
However, Group Income Protection is not a taxable benefit in kind in most instances.
That means that you as the employee shouldn’t have to pay any additional tax for having your company pay for Income Protection on your behalf.
You’ll have to pay tax on Group Income Protection payouts just as you do on your salary – but this is all handled by your employer and the PAYE system.
In the event of you claiming, the insurer will pay a sum equivalent to your wages to your employer, and your employer will distribute this to you via PAYE. As a result, it will be taxed as if you’d earned the income.
Frequently Asked Employee Benefits Questions
Sam was knowledgeable and attentive and spent a long time explaining and working out what Income Protection insurance would be best for me.
I researched Drewberry to make sure they would be likely to add value to the confusing process of finding suitable insurance – and they delivered completely; I was very impressed and feel like they added real value in terms of consultation and guidance. Would recommend without hesitation.
Will is fantastic went through everything in detail really helpful and ultimately ensured that I went with the best product for my circumstances. Thanks!