Personal Accident/sickness policy-is it claimable?

[danasdaycare]

Hi,

I tried finding on here but no success.

I have an accident/sickness insurance policy which states I will paid x if unable to work for more than 30 days. I pay this monthly. Can I claim this as a business expense as it's not a policy I would have taken out if not self employed?

Thanks in advance,

Dana

[hectors house]

I don't think so - my husband has a health plan through his work and this is seen as a benefit and think he has to pay tax on it. But hopefully someone more knowledgeable will reply soon.

[christine e]

No I don't think you can

Christine

[Chatterbox Childcare]

Now I would say yes but I would also advise you to ask the HMRC

[rickysmiths]

I would say yes and I put mine through because I wouldn't have it if I wasn't childminding.

[MrAnchovy]

No you can't. The reason is simple - this expense does not help your business in any way, it simply replaces your income from the business with income from the insurance. You cannot claim as expenses things that don't help your business.

Do check that you qualify for any payout if you are self employed, as many policies only pay out for employees.

[rickysmiths]

But surely it does help my business in that it supports me if I have and accidents or with mine if I am ill and can't work for more than 30 days. If I did not insure this so i had an income at a time like this I would probably have to let my Registration as a Childminder lapse because I would not be able to pay for my Ofsted registration, my PLI insurance or maintain the mortgage and bills on the home I run my business from. If this couldn't happen I would probably loose that home so I would then have lost my business as well.

If I was employed I would not need this insurance because I would have sick pay which would continue to pay my bills for me.

I will certainly be double checking with my accountant who allowed it as an expense last year.

[MrAnchovy]

But surely it does help my business in that it supports me if I have and accidents or with mine if I am ill and can't work for more than 30 days. If I did not insure this so i had an income at a time like this I would probably have to let my Registration as a Childminder lapse because I would not be able to pay for my Ofsted registration, my PLI insurance or maintain the mortgage and bills on the home I run my business from. If this couldn't happen I would probably loose that home so I would then have lost my business as well.

That's not how HMRC sees it unfortunately. The 'help to your business' must be the ONLY reason . Your argument could be used to justify any expense - if you don't eat food you won't be able to do your job, so you could claim for your breakfast and dinner, if you need to present yourself properly so you could claim for the hairdresser etc. This principle is called "exclusivity" and has been tested many times in the courts; there are hundreds of pages of HMRC internal guidance (http://www.hmrc.gov.uk/manuals/bimmanual/bim37000.htm) on it.


If I was employed I would not need this insurance because I would have sick pay which would continue to pay my bills for me.

I've said it before and I'll say it again the "would I need it if I were not self-employed" test can be a useful shortcut when considering expenses but it is NOT a test that has any basis in law. To be claimable an expense (or an identifiable part of an expense) must be incurred necessarily, wholly and exclusively for a business purpose, and not be specifically excluded by law.


I will certainly be double checking with my accountant who allowed it as an expense last year.

I don't normally comment on advice given by other professionals but this one is so clearly not allowable that I would really question whether this person is competent.

[rickysmiths]

That's not how HMRC sees it unfortunately. The 'help to your business' must be the ONLY reason . Your argument could be used to justify any expense - if you don't eat food you won't be able to do your job, so you could claim for your breakfast and dinner, if you need to present yourself properly so you could claim for the hairdresser etc. This principle is called "exclusivity" and has been tested many times in the courts; there are hundreds of pages of HMRC internal guidance (http://www.hmrc.gov.uk/manuals/bimmanual/bim37000.htm) on it.



I've said it before and I'll say it again the "would I need it if I were not self-employed" test can be a useful shortcut when considering expenses but it is NOT a test that has any basis in law. To be claimable an expense (or an identifiable part of an expense) must be incurred necessarily, wholly and exclusively for a business purpose, and not be specifically excluded by law.



I don't normally comment on advice given by other professionals but this one is so clearly not allowable that I would really question whether this person is competent.


Thank you for your replies.

[danasdaycare]

Thanks for all the replies.

I have made sure that my policy is a self employed one, so it will pay out. It's peanuts anyway, so would have to be very ill before I claimed.

Now, to stop my procrastinating and finish my first tax assessment!