Can I claim?
Professional insurance comes in all kinds of shapes and forms but in many cases it's a legal requirement which is necessary in order to protect you in case of a claim being brought, either by an employee or a disgruntled customer or third party.
HMRC allows the entire cost for professional insurance to be included for tax relief purposes.
As a self-employed professional, simply select "Financial and Insurance" expenses, then "Professional indemnity insurance premiums".
The most common type of business insurance is professional indemnity insurance, a type of cover which offers wide-ranging and extensive protection to any business. Professional indemnity insurance protects an individual from an unhappy customer who may accuse them of having a product which caused damage, as well as errors, delays and negligence.
If your business is just getting started, you may understandably be looking to cut your costs. Scrapping professional indemnity insurance is a bad idea; this is the bare minimum type of cover that any business should have.
But if you are looking to cut costs, you can help by making sure you include the premium for your cover in your tax relief calculations. HMRC allow the whole premium for a policy of this nature to be included for tax relief purposes.
In many cases the tests which is applied to see if an expense qualifies for tax relief is whether it could be said to be used exclusively for business purposes. In the case of professional indemnity insurance, as well as other types of cover, there is no question of it being used for a dual purpose.
Therefore tax relief can be claimed on professional insurance and also any membership of allowable professional bodies or subscriptions too.
Other types of insurance you may need to consider include employer's liability, public liability, contents, stock and material insurance plus premises insurance.
Although it may feel like a waste of money to pay for insurance cover, you can help to recoup your losses by including the cost of the premium into your tax relief claim.
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