 |
ClearSky Accounting Specialist contractor accounting. No nonsense fixed fee service from £95/month. Find out more. |
Income protection insurance - should my limited company pay the premiums?
Posted Jul 7, 2011
An Income protection insurance policy will cover you in the event that you suffer an accident or become ill, and are therefore unable to work.
Policies of this type have always been popular with contractors, who do not have the protection enjoyed by most permanent employees.
You can take out an income protection policy on a company or individual basis, however payments are treated differently for tax purposes. The tax treatment of any claim-related income also differs according to who takes out the policy.
Company or individual policy?
If you take out an insurance policy via your own limited company, any premiums paid are likely to be treated as a legitimate business expense by your accountant, but there may be personal tax implications if these premiums are seen as a 'benefit in kind'.
If you take out an individual policy, you need to fund any premiums out of your post-tax income. However, any claim-related funds you acquire if you are unable to perform your contract duties would be tax free.
If you make a claim on your limited company policy, any incoming funds would be subject to corporation tax, and you (as an individual) would also be subject to tax and NICs when the funds are paid to you from the company.
We recommend you speak to a specialist financial advisor to work out which is the best route for you to take.
Further information
You can find out more, and get a quote, in our guide to contractor income protection.
Contractor Services
- Professional Indemnity Insurance - Essential cover from Hiscox
- The fair umbrella company - take home more pay with paraplus
- InTouch Contractor Accounting - specialist online service & great advice
- Parasol - the UK's favourite umbrella company
- Contract Experts - ClearSky Accounting on 08000 325 326
- Helix Management Ltd - Up to 90% retention. Same day payments.
- Umbrella Company - 12,000 contractors can't be wrong!
- Together we're stronger! - Join PCG, representing contractors
- Cloud 9 Group - Umbrella Solutions only £27.50 per week
- Qdos - IR35 experts - Providers of low cost contractor insurance
- K & B Accountancy Group - Fixed fee contractor accounting only £75pm
- Free IR35 & Tax Review - Call ICS on 0800 195 3750
- Contractor Mortgages - the best deals, based on your contract rate alone!
Related Articles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
