Are Income Protection Premiums Tax Deductible and Can I Offset Them as a Business Expense?

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, any benefit payable should a claim arise is paid tax-free.

Business Income Protection

If you wish to put your Income Protection premiums through your limited company as a trading expense it is usually wise to take out Executive Income Protection rather than a personal plan.

With a personal plan tax is paid on the premiums (which are paid from post-tax earnings) and as a result, a claim will be paid tax-free. With an executive/directors’ plan the premiums can usually be expensed and the claim would be paid to the business which would need to be distributed as income that would be subject to tax.

As such, 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.

When taking out cover through your limited company most providers require the policy to be set-up by an expert adviser. If you need any help please do not hesitate to pop us a call on 02084327333 or email help@drewberry.co.uk.

Why Speak to Us…

We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to let us help.

• There is no fee for our service
• We are independent and impartial
  Drewberry isn’t tied to any insurance company, so we can provide completely impartial advice to make sure you get the most appropriate policy based solely on your needs.
• We’ve got bargaining power on our side
  This allows us to negotiate better premiums for you than you going direct yourself.
• You’ll speak to a dedicated expert from start to finish
  You will speak to a named expert with a direct telephone and email. No more automated machines and no more being sent from pillar to post – you’ll have someone to speak to who knows you.
• Benefit from our 5-star service
  We pride ourselves on providing a 5-star service, as can be seen from our 3900 and growing independent client reviews rating us at 4.92 / 5.
• Gain the protection of regulated advice
  You are protected. Where we provide a regulated advice service we are responsible for the policy we set-up for you. Doing it yourself or going direct to an insurer won’t provide this protection, so you won’t benefit from these securities.
• Claims support when you need it the most
  You have support should you need to make a claim. The most important thing when it comes to insurance is that claims are paid and quickly. We are here to support you during the claims process and make sure it’s as smooth and stress free as possible.