I have a client who pays a monthyl direct debit for income replacement insurance.
Is income replacement insurance an allowable business expense for a sole trader? I have been reading up on it and everyone seems to say something different but it looks like it may be allowable as long as if any payment is paid out that it goes into the accounts as taxable income?
If the money is paid to the client then it would not be an allowable expense of the business.
If the money is paid to the business (a key person policy) then it would be an allowable expense of the business.
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I think this has changed over recent years. I always believed you didn't claim it as deductible against tax because it would render any pay outs to individuals as taxable whereas the benefit of the policy was that the income was tax free. However I think nowadays there are policies that are tax deductible. I think they refer to these as 'relevant person' policies but I may have this wrong. I first heard about these a few years ago and looked into them and back then it seemed that the premiums being charged pretty much nullified any tax claiming benefits, not sure if they are more keenly priced now though.
