Do I pay tax on income protection benefits?

I’m thinking about taking out an income protection policy. I can’t seem to find any information about how I pay tax on the benefit if i make a claim?

Question asked by Richard Wright
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Answered by Tom Conner

Income protection payouts are generally tax free. If you pay for the premiums yourself from your net income then the money has already been taxed. This is why most insurers generally only allow you to insure 70% of your gross income as it works out as approximately the same as your net income.

Some self employed people or company directors pay for their income protection premiums via their business. This means that the benefits are paid out to the company and would be subject to tax. If you chose this option it would be best to consult a tax advisor or accountant for advice.

If you would like any further information on income protection please contact our insurance advisers on 02084327333. We have access to insurance plans from the whole market so can find the policy which is best for you. You can also get an online quote for income protection on our website.

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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.
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