Critical Illness Cover is insurance that pays you a lump sum or monthly income if you were to get very ill and were unable to work. The illnesses that are covered depend on the provider and the type of cover that you have selected so it is important that you are aware of what you are covered for.
What are the tax implications of a Critical Illness payout?
Critical Illness Insurance gives you financial security if you were to get seriously ill unexpectedly. If you receive a large lump sum from your Critical Illness Insurance then you should be aware of the tax implications.
If you pay the Critical Illness premiums yourself
If you pay the premiums for your Critical illness Insurance yourself then HMRC sees that the money for the premiums has already been taxed which means that any payouts you receive are not taxable.
If your employer the Critical Illness premiums yourself
If you receive Critical Illness Insurance through your employer then tax will be due on any payouts that you receive from the insurance.
This is because your employer can seek corporation tax relief on the cost of paying your insurance premium.
Find out which insurance is best for you
If you do not have Critical Illness Cover or want to explore which insurance options are best for you, you can book in a no-obligation meeting with a financial adviser online or by calling us on 0117 973 0500.
Meetings can be at your home address, at one of our offices or on zoom.
The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.
