Business insurance

Insurance taken out for the purposes of the business — such as professional indemnity or public liability — is generally an allowable cost.

Sole traderAllowable

Ltd companyAllowable

EmployeeNot allowable

Conditions

Insurance taken out wholly for the business is allowable — for example professional indemnity, public liability, employer's liability (legally required once you have staff), business contents, cyber and commercial legal protection.
Insurance that protects you personally rather than the business is not allowable for a sole trader — for example personal life cover, private medical insurance, or income protection that simply replaces your own earnings.
For a limited company there are useful exceptions: a 'relevant life' policy arranged and paid for by the company for a director or employee is allowable with no benefit in kind, while private medical insurance the company pays for a director is deductible for the company but a taxable benefit on the individual, reported on the P11D with Class 1A National Insurance due.
Employees generally cannot claim business insurance as a personal job expense.

Common mistakes

Claiming personal life or health insurance with no genuine business basis.
Including the private element of a mixed policy.
A sole trader claiming income protection or personal life cover as a business cost — these protect you personally, not the business.

What to keep

Policy schedules and premium invoices.

Real-world example

A freelance consultant pays for professional indemnity cover required by their clients. The premium is wholly for the business and is allowable in full.

Frequently asked

Is employer's liability insurance allowable?

Yes. Where you employ staff and the cover is required for the business, the premium is generally an allowable cost — and employer's liability cover is a legal requirement once you have employees.

Can my company pay for my private medical insurance and claim it?

Yes — the company can deduct the premium, but because it benefits you personally it's a taxable benefit in kind, reported on your P11D with Class 1A National Insurance due. A company-paid 'relevant life' policy is treated more favourably, with no benefit-in-kind charge.

Not sure how this applies to you?

The rules shift with your circumstances. A qualified accountant can confirm what you can claim and handle it for you.

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Related allowances

Source: HMRC guidance · Last checked 2026-06-17

This page is general information based on HMRC published guidance, not tax advice. Status shown is a plain-English summary — your own position can differ. Always check the HMRC source above and speak to a qualified accountant before making a claim.