Public liability insurance

Conditions

• Public liability insurance is explicitly listed as an allowable expense in GOV.UK's self-employed expenses guidance (updated November 2024). The cover protects against third-party claims for personal injury or property damage caused by the business's activities, and the premium is wholly incurred for business purposes.
• Public liability insurance is not legally required for most UK businesses, but it is practically essential for anyone who has customers or members of the public on business premises, or whose work involves attending clients' homes or workplaces. Many trade associations, professional bodies, and client contracts require members and suppliers to hold a minimum level of cover.
• The cover level required varies by trade and client. Common limits are £1 million, £2 million, £5 million, and £10 million; the appropriate level depends on the risk profile of the work. The full premium at whatever cover level is chosen is allowable, provided the policy is for the business.
• For a limited company, public liability premiums are an allowable deduction for corporation tax.
• Employees cannot claim public liability insurance premiums as a personal tax deduction. Public liability is the employer's insurance obligation — even where the employee's work could give rise to a claim from the public, cover sits with the employer, not the individual worker.

Common mistakes

• Confusing public liability with professional indemnity insurance. Public liability covers physical injury or property damage caused to third parties by the business's activities; professional indemnity covers financial loss to clients caused by errors in professional services. Many businesses need both.
• Assuming public liability cover also covers employees injured at work — it does not. Employers' liability insurance provides separate, legally required cover for employee injury and illness claims. Public liability and employers' liability serve different parties.
• Overlooking minimum cover requirements in trade body memberships or client contracts — check these to confirm the policy limit is adequate.

What to keep

• Policy schedule showing the insured, indemnity limit, period of cover, and premium.
• Premium invoices or payment records.

Real-world example

A self-employed electrician attends clients' properties to carry out installations and repairs. He holds £5 million public liability cover — the minimum required by his professional trade body — at a cost of £780 per year. The premium is wholly for the business and is allowable in full.

Frequently asked

Related allowances