Are income protection premiums tax deductible and can I offset them as a business expense?

I want to take out income protection but, as a company director, I want the business to pay and expense the premiums, is this possible?

Question asked by Amal Rachid
Compare Top 10 UK
 Protection
Insurers
 
Takes approx. 60 seconds
Type of Policy
Income Required
per
month
Date of Birth
Loading your options...
Thank you for using our Quote Tool
If you need some help, just call us!
T: 02084327333
Our in-house Experts are here to provide Whole of Market Advice!
Our Experts can answer all your questions
Our Experts can send you more appropriate options based on your personal circumstances

Very important if you are either Self-Employed or a Company Director.

Our online quote tool is good but our Experts are better

Oue Experts have access to far more insurers and can often find a better deal offline.

Saves you time, let our Experts do what they are best at

Answered by Tom Conner

Firstly, it is always wise to consult your accountant on matters of taxation and any final decision will always rest with the local tax inspector.

Income Protection taken out personally tends to be paid from your net income and as a result and benefit payable should a claim arise is paid tax free.

Be careful, your benefit may be taxed

If you wish to put your income protection premiums through as a trading expense it is usually wise to take out an executive income protection plan rather than a personal plan.

With a personal plan tax is paid on the premiums (which are paid from after-tax earnings) and the benefit is tax free, however, with an executive/directors plan the premiums can usually be expensed but the benefit paid out will incur income tax and national insurance contributions.

Need to insure the income tax liability

Thus, with an executive plan the insurers will usually allow you to cover up to 80% of gross earnings rather than up to 60% with a personal plan. This is because you would need to insure a higher amount to cover the tax.

Essentially, with an executive plan the business takes out the plan and pays the premiums on your behalf but any benefit paid out would be paid to the business, which would then pay you via the Pay As You Earn (PAYE) system.

income protection
 
director
 
executive
 
premiums
 
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 Insurers
  Takes approx. 60 seconds
 - 
Need help? 
Call us on 

Frequently Asked Income Protection Insurance Questions

 
I am seriously considering income insurance for myself, I understand all the benefits but I’m worried...
 
I’m looking to take out income protection insurance and currently researching all the aspects of...
 
I have a few loans and I am thinking of taking out payment protection to cover them and my other monthly...
 
I’m thinking about taking out Income Protection but one thing i’m unsure on is if I will...
Need Help? Live chat now and get an instant answer from our Experts...

Neil
Pensions

Victoria
Insurance
Our Latest Reviews
Mark France
02/01/2018

Josh at Drewberry was extremely helpful and friendly in answering my many questions about the policy before I went ahead.

Mark Walters
06/01/2019

Drewberry was the only website I could find that would give me an indicative Relevant Life cover quote. Victoria at Drewberry was very helpful throughout the whole application process.

Paula Cummings
24/12/2018

They gave me good advice and weren’t pushy! I felt that I was getting what I asked for and I’m happy with the final product that I bought.

We are rated 4.9/5 based on 1966 independent client reviews.
To read more of our independent client reviews click here →
REVIEWS
EXCELLENT
4.92 / 5 Average
1916 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