Tax relief on Income Protection, helps make it an affordable insurance benefit, but how does it work?
Income protection premiums, up to certain limits, qualify for PAYE tax relief at your higher rate of tax.
If you are employed, the life assurance company will deduct tax and social insurance payments from your benefits in the same way that your employer would.
If you are self-employed, it may be payable gross and should be treated like trading income in your accounts.
How much tax relief could you claim on your premiums?
You can claim tax relief on your premiums at your marginal rate of tax i.e up 40%.
If your annual salary is less than €40,000 in 2023, then 20% tax relief applies. You can check the latest salary level cut-offs here.
How do you claim tax relief?
If self-employed, to claim your tax relief you simply send the income protection tax certificate you will receive along with your policy documents as soon as you start your policy. The tax relief can be claimed when you file your end-of-year tax return.
If you are an employee hand the tax certificate into payroll and once you have registered, your payslip should show the relief that you have received.
Income Protection Benefits
The state provides income protection benefits to PAYE workers, except for the self-employed. The level of personal benefit, currently payable by the state amounts to €11,440 per annum.
The maximum benefit payable by the life insurance company under an income protection policy is 75% of salary, less the state benefit where applicable.
Running your Income Protection Quote
To get your instant full insurer comparison income protection quote click here!
Ken O’Gorman – QFA
OneQuote.ie | Smart Financial Protection
