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Business Insurance Tax Deductible UK: What You Can Claim and How

If you run a small firm or a growing startup in the UK, you’ll notice insurance premiums eating into your profit margin. The good news? Many of those costs are tax deductible. Knowing which policies qualify and how to claim them can shave a decent chunk off your tax bill.

Which Insurance Types Are Deductible?

HMRC allows you to deduct premiums for any insurance that protects your business operations. The most common ones include:

  • Public liability insurance – covers third‑party injury or property damage.
  • Professional indemnity insurance – protects against claims of negligence or advice errors.
  • Employer’s liability insurance – mandatory if you have staff.
  • Business interruption insurance – covers lost income after a covered event.
  • Commercial vehicle insurance – applies when a vehicle is used for business purposes.

Personal policies, like home insurance or personal health cover, are not deductible even if you work from home.

How to Claim the Deduction

Claiming is straightforward if you keep good records. Follow these steps:

  1. Make sure the policy is in the company’s name, not your personal name.
  2. Keep the original invoice or receipt showing the premium amount, date, and insurer.
  3. Record the expense in your accounting software under a "Insurance" expense category.
  4. When you file your corporation tax return (CT600), include the total insurance cost in the “allowable expenses” section.

If you’re a sole trader, list the same figures in the “business expenses” box of your Self‑Assessment tax return.

Common Mistakes to Avoid

People often lose out on deductions because they make simple errors:

  • Mixing personal and business policies. If a policy covers both, only the business portion is deductible.
  • Missing the deadline. You have to claim within the accounting period the expense relates to.
  • Not keeping proof. HMRC may ask for invoices, so keep them for at least six years.
  • Ignoring VAT. For VAT‑registered businesses, you can usually reclaim the VAT on the premium as a separate input tax.

Tips for Maximising Your Savings

Here are a few quick ideas to get the most out of your insurance deductions:

  • Bundle policies with one insurer – you’ll often get a discount, which lowers the premium you claim.
  • Review coverage annually – you might be paying for unnecessary add‑ons that waste money.
  • Consider a self‑insurance fund for low‑risk areas – you still claim the premiums you actually pay.
  • Use accounting software that flags deductible expenses automatically – it reduces manual errors.

Remember, the goal isn’t just to lower your tax bill, but to protect your business while staying compliant. If you’re unsure whether a specific policy qualifies, a quick chat with your accountant or a tax adviser can clear things up.

Bottom line: most business‑related insurance premiums are fully deductible in the UK, provided you keep clean records and claim them in the correct tax period. Take a few minutes each month to log the expense, and you’ll keep more cash in the bank for growth.

Are business insurance premiums tax-deductible in the UK? Clear 2025 guide for sole traders and limited companies with rules, examples, and how to claim.