Skip to main content

Self-Employment and Health Insurance Tax Deductions

Health insurance is something that can help protect self-employed people when they are unable to work. However, the rules on claiming it back against your tax can be confusing. Group health insurance is generally an allowable expense, but if you have a private policy, you should seek advice to find out whether your specific insurance is tax deductible.

When you are self-employed, you become responsible for your own tax affairs. This means you are the one who has to sort out your obligations for all of your undertakings, including making sure you are paying the right level of tax and national insurance.
Being self-employed also means that you are able to claim for certain expenses. Many self-employed people are uncertain as to what they are actually allowed to claim for - for example, it isn’t always entirely clear whether health insurance is an allowable tax deduction.

If you are self-employed then you are probably aware that there are ‘allowable’ and ‘unallowable’ expenses that you are allowed to claim for. As a general rule, allowable expenses are those that are necessary or of benefit to the business. For example, maintenance costs or the cost of premises insurance are definitely allowable. Fuel costs associated with the business and most costs relating to any employees you might have are also allowable. However, health insurance is not usually a cost that you can claim back.

This is largely because if you are self-employed and take out a health insurance policy, this is something that only benefits you and so could be seen as a personal expense rather than one that is necessary for your business. However, if you have got any employees and you choose to take out a group health policy that benefits them as well as yourself as the owner and/or director of the business, this is something that will usually count as an allowable business expense.

This means that the issue of health insurance in terms of tax deductions for self-employed people can sometimes be complicated, so it is worth speaking to a tax or insurance professional to get a clearer view of exactly what you will be able to claim for against your tax. For example, some business insurance policies come with a form of health insurance in case you are unable to work for a period of time. This isn’t necessarily what we would call a ‘typical’ health insurance policy, but it would provide you with some cover and is more likely to be allowable as a business expense.

The issue of health insurance for self-employed people is definitely an important one, particularly for those people who have no employees and no one else who can take on their work if they are ill. Research has found that at least half of self-employed people in the UK don’t currently have income insurance, critical illness insurance or private medical insurance – all of which could help to protect you and the business if you were unable to work for a time.

Also, research has also found that around 55% of self-employed people don’t have anyone else who could do their work on their behalf in the event of them being ill. As all self-employed people know, not being able to work means that you don’t get paid and could lead to you losing clients, so this is definitely an issue that merits consideration. In the UK, private medical insurance is not a requirement due to the existence of the NHS, but it is still an option and arguably is more useful for self-employed people than most.

Overall, if you have got a private health insurance policy, it is unlikely you will be able to claim it back against your tax. However, some medical insurance expenses are allowed depending on the form they take and who they are for - if they benefit any employees you may have, you are much more likely to be able to claim it as an expense. This means it’s definitely worth seeking advice from a professional on exactly what you are able to claim to make sure everything is in order.

Comments

Popular posts from this blog

Why it’s important to save for retirement

While retirement may seem far off in the distance for some, financial experts say you’re never too young to begin saving.  In fact, the earlier you calculate your retirement needs and start building your nest egg, the easier it will be to create a viable plan for the future. Many experts advise you begin saving a percentage of your income for retirement as soon as possible, no matter how little the contribution may be, as it’s possible the Social Security benefits millions of people currently depend on may be in jeopardy.

Low interest credit cards - how to make them work for you

Credit cards are borrowing instruments, unlike debit cards where you already have the money. Banks are there to make money too. Just like high street stores, they hope to maximise their profits within the rules. So it’s important to understand the basics and find a credit card that’s right for you – you can compare low APR credit cards here . Now you know the rules, let’s find out how to play the game. The financial services industry charges interest on the money that it lends out. Let us assume you borrow £100 on your credit card and keep it for exactly one year before you pay it back. For the purposes of this article, we will assume your loan attracts 8% interest per year, which is the Annual Percentage Rate, or APR for that particular transaction. Practical example

Brief Overview of Credit Card Machines

The world has witnessed so much of modernization eliminating the cash transactions from businesses. These days we have all sorts of online transaction which is popularized by the help of credit card machines. This is a device that can do transactions with a debit card or a credit card. Credit card machines securely transmit funds from one account to another. It is a Point of Sale terminal that can do transaction with a credit / debit card. This machine allows a merchant to insert, swipe, or key in manually the required credit card information and transmit such data to the merchant service provider for consent and then later on the transfer the fund to the merchant. It is used by merchants to directly capture card information instead of manually entering it in card details. Credit card machines are efficient enough to provide the benefit of decreased transaction processing times.

Four Things to Know About the Housing Market in 2021

Due to the Covid-19 pandemic, the increase in the number of people working from home as well as the initial ban on property transactions in the first lockdown, the housing market in the UK was majorly affected. After the first lockdown, the housing market restarted in the UK and was allowed during the second and third lockdown. The government introduced the stamp duty holiday which definitely helped boost the housing market as well as the buyer's confidence, and due to its overwhelming success, this scheme has been extended till July 2021. Even though the demand for homes increased, the average price of property rose in certain areas and government schemes worked like a charm, the housing market was nowhere close to where it was before the pre-Covid era. While no experts can predict with any amount of certainty the future of the housing industry in the UK, here are the four things that you need to know about the housing market in the UK in 2021. Increase in demand for properties in

Peer-to-peer Lending Oprions for Students

Is peer-to-peer lending safe? Going to college is necessary in this day and age if you hope to get a good paying job. However, finding the money to do so isn’t always easy. One method of getting money for college is to take out a student loan from the government. Another is to go a private lending institution, such as a bank or credit union. A third method, and one that is becoming more and more popular, is to get a loan from a private individual. This type of loan is usually called peer-to-peer (P2P) lending. Following are a few options for students who are seeking a peer-to-peer loan. What Is Peer-to-Peer Lending? Peer-to-peer lending is essentially a financial agreement that takes place between individuals. One party, you, borrows money from someone else. It works the same way as a traditional loan because unlike a scholarship, grant, or gift, you will be expected to pay the money back, on time, and with interest tacked on. You and the lender agree on how much will be paid back wit

Responsibilities a Property Management Company Needs to Handle

When you are considering investing in a residential or commercial property, you need to plan a number of things. At such times, getting help from the right professionals may be of immense help. You may consider opting for property management companies for handling the responsibilities. Understanding the tasks, before and after the purchase, these companies handle is necessary before you employ them.

Why comparing ISA rates is a necessity?

Investment is not about the capital you put in an account, it is your ability to judge risk and return trade-off. Unless you weigh your decision carefully you may end up making no profit. Choosing the best ISA provider therefore could be a difficult task. If you are investing in cash ISAs you must have few hundreds of options to test the best. One should compare ISA rates for the bigger return. But who can help you on this? How do you know which Cash ISAs is giving better interest rate? What are the terms and conditions? Who are the account providers? Are these accounts easily accessible? What others are talking about those ISA accounts?  How advantageous cash ISAs could be in terms of risk coverage?