Business insurance

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

Cyber insurance

Cyber insurance premiums are an allowable business cost. Cyber cover protects the business against the financial consequences of data breaches, ransomware, cyber attacks, and related digital threats. GOV.UK's self-employed expenses guidance states that 'you can claim for any insurance policy for your business.'

Employers' liability insurance

Employers' liability (EL) insurance is a legal requirement for businesses with employees, and the premium is an allowable business cost. The law requires a minimum of £5 million cover from an authorised insurer. Sole traders and limited companies with no employees, or those employing only close family members, are exempt from the requirement.

Income protection & personal insurance

A personal income protection policy taken out by a sole trader is not an allowable business expense — the premium protects personal income rather than the trade and fails the wholly-and-exclusively test. A company-funded income protection arrangement for employees or directors can be deductible for the company, subject to the structure chosen. If the premium is not allowable, any benefit paid out is generally tax-free.

Professional indemnity insurance

Professional indemnity (PI) insurance premiums are an allowable business cost. PI cover protects the business against claims arising from professional negligence, errors, or omissions in the services provided to clients.

Public liability insurance

Public liability insurance premiums are an allowable business cost. Public liability cover protects the business against claims from members of the public, customers, or visitors who suffer personal injury or property damage as a result of the business's activities.

Insurance