Is Group Income Protection a Taxable Benefit in Kind?

My employer is thinking of introducing a Group Income Protection policy to provide sick pay insurance in case we can’t work. I was just wondering if Group Income Protection was taxable and might be taken out of my wages, as I’m not sure I want that.

Question asked by G Ahmed
Compare Top 10 UK Insurers
FREE Independent & Impartial Advice
Type of Cover
Company Name
 
Number of Employees

Answered by Michael Englefield

Some types of Group Insurance policies are taxable. 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 Group Income Protection a P11d?

Is Group Income Protection 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.

Group Income Protection
 
Business Income Protection
 
P11d benefit in kind
 
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
Compare Top 10 UK Business Insurers

Frequently Asked Employee Benefits Questions

 
I’ve had a quote from an insurer for group income protection and there is a section on the quote that...
 
We are a rapidly expanding business and wanted to know whether we are limited in the amount of key person...
 
I’ve been looking into providing Critical Illness Cover for my employees, but do I have to pay...
 
I’m a Company Director needing Life Insurance. I spoke to an old colleague and they suggested Relevant...
Need Help? Live chat now and get an instant answer from our Experts...

Neil
Pensions

Victoria
Insurance
Our Latest Reviews
Doug Harvey
05/09/2018

Victoria swiftly helped in finding a solution which offered the required cover, with a more competitive premium.

Huw Davies
05/09/2018

The service I received from Drewberry was excellent. Egle provided me with very detailed information about my insurance options and explained the pros and cons of each option clearly.

James Ager
21/08/2018

Friendly, helpful and knowledgeable. Nadeem Farid searched the market and found a product that matched our needs.

We are rated 4.9/5 based on 1742 independent client reviews.
To read more of our independent client reviews click here →
REVIEWS
EXCELLENT
4.93 / 5 Average
652 Reviews
Verified Buyer
Overall Rating
The whole process was a pleasure. Drewberry we're easy to deal with, polite, knowledgeable and helpful
Verified Buyer
Overall Rating
Very good, clear service would recommend to friends and family
Anon
Overall Rating
Sam Carr provided an efficient and professional service.
Verified Buyer
Overall Rating
Sam Carr provided a professional but enthusiastic service and helped make the whole process very straight forward. Goodness knows I have been through enough application forms recently. My insurance product was never going to be easy to find and I had been rejected on a number of other occasions through others ironically due to well managed common health conditions. I identified Drewberry in a last and disappointing trawl on th web to find someone that actually wanted to take on a difficult case like me. Some brokers wouldn't even consider me. When we applied for my first choice product Sam wasn't at all deterred by the long wait for my GP report or the final rejection that came back from the insurer, sadly I have become used to it. Within a day he had lined up the second choice and to my surprise he had hit the nail on the head and introduced me to the correct insurer and terms for my needs whilst nogotiating an excellent premium. I am extremely satisfied with what Sam has achieved for me and I would have no hesitation in recommending either him or Drewberry to friends, family and and business contacts. In the future, Drewberry will be my first point of contact. Many thanks!
Kym
Overall Rating
Tailored to my need and the staff gave very good service