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Protecting your income

31 October 2007 / Penny Bates
Issue: 4132 / Categories: Comment & Analysis
Tax relief for income protection policies and the taxation of receipts can be confusing. PENNY BATES provides a brief explanation


  • What is IPI and how does it work?
  • What level of cover is required?
  • Tax consequences for the self employed.
  • Three different employer/employee scenarios.

Before looking at the tax position in respect of premiums and receipts from income protection insurance policies (IPI) (previously known as permanent health insurance) it would be useful to look at why people take this cover. What is the state of health of the nation that may influence a purchasing decision? According to the Department for Work and Pensions in 2005 one in five adults in Great Britain had a disability or long-term health problem. More than 2.7 million people of working age had been away from work and claiming benefits and 74% of their number had been claiming benefit for more than two years and astonishingly 35% had...

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