Do I Pay Tax On Income Protection Payments?
2 Jan 2020
It won’t be news to any working adult in the UK that we are essentially taxed everytime we breathe, eat and sleep - and not even insurance products are spared being taxed. This includes income protection, however it’s not as black and white as that. With income protection, the tax depends on who is paying the premiums for your policy - you, your employer or a bit of both.
Who’s footing the bill?
In the eyes of the taxman, you’ve paid for the premiums yourself from your net income at the source, so the policy has effectively already been taxed and the taxman has had his bit one way or another. This is why most insurers generally only allow you to insure 65% of your gross income, as it works out as approximately the same as your net income.
What if my income protection is paid for by my employer?
What if I’m not sure?
It’s possible that you could be paying towards an income protection policy out of your salary without even knowing. It’s definitely worth finding this out if you’re considering taking out an income protection policy of your own so that you don’t end up duplicating cover and ultimately wasting your precious pennies.
If you have anymore questions about income protection, we can help. Give us a call on 0800 316 7253 and chat with one of our expert advisers.
Average cost of income protection
30 Jul 2020
You want to protect your salary, but you don’t want to have to spend a lot of money doing so
Joint Income Protection Insurance
22 Jul 2020
Is a joint income protection policy possible?