Contractor Accountants

Can contractors reclaim insurance costs?

Business insurance is an allowable company expense for UK contractors operating through a limited company. Professional indemnity, public liability, employers liability, and cyber liability premiums can all be deducted from company profits before corporation tax is calculated. The policy must be taken out in the company name and relate directly to your contracting activities. Personal insurance policies such as life or health cover are not claimable through the company.

By Jordan Macey MAAT Reviewed by Noor Fiaz Updated 16 Apr 2026 1

Can contractors reclaim insurance costs? - GoForma Contractors | UK Accountants & Tax Advisors

Key takeaways

Business insurance premiums paid by your limited company are fully deductible as an allowable expense against corporation tax.
Qualifying policies include professional indemnity, public liability, employers liability, cyber liability, and business contents or equipment cover.
The insurance policy must be in your limited company's name to be claimed as a business expense rather than a personal cost.
Personal insurance such as private medical, life, or income protection is not an allowable company expense, though some can be set up as tax-efficient benefits in kind.
Keeping invoices and proof of payment for all insurance policies is essential in case of an HMRC enquiry into your company expenses.

Business insurance costs can be reclaimed through your business and are eligible for Corporation Tax relief.

Frequently asked questions

Which insurance policies can contractors claim as business expenses?

Professional indemnity, public liability, employers liability, cyber liability, and business equipment or contents insurance are all allowable business expenses. The policy must be held in your limited company's name and relate directly to your contracting activities to qualify. Tax investigation and National Insurance enquiry cover is also fully deductible as a legitimate business cost against your company profits.

Can contractors claim private medical insurance through their company?

Your company can pay for private medical insurance premiums, but the cost is treated as a benefit in kind for tax purposes. The company receives corporation tax relief on the premium amount paid, but you pay personal income tax on the benefit value through your annual P11D filing. Despite this, it can still be more tax-efficient than paying the full premium personally depending on your marginal tax band.

How do I claim insurance costs on my company accounts?

Record the insurance premium as a business expense in your accounting software when the payment leaves your company bank account or when the invoice is received. Your accountant will include the cost in the profit and loss statement at year end, reducing your taxable profits accordingly. Always keep the original invoice and bank payment confirmation as supporting records for audit purposes.

Is professional indemnity insurance tax deductible for contractors?

Yes. Professional indemnity insurance is one of the most common and straightforward allowable expenses for UK contractors operating through a limited company. Many end clients contractually require proof of cover before you are permitted to start an engagement. The full annual premium is deductible against your company profits, directly reducing your corporation tax liability for that financial year.

Can sole trader contractors also reclaim insurance costs?

Yes. Sole traders can deduct qualifying business insurance premiums as an allowable expense on their annual self-assessment tax return filed with HMRC. The same fundamental rules apply as for limited companies: the policy must relate directly to your trade and be incurred wholly and exclusively for legitimate business purposes. The deduction reduces your taxable profit and therefore your income tax liability.

Do I need to keep insurance receipts for HMRC?

Yes. HMRC requires you to keep records of all business expenses including insurance for at least six years after the end of the relevant company financial year. This includes the insurance policy documents showing the cover details, the invoices from your insurer, and proof of payment from your company bank account or credit card statement.

Can I reclaim insurance costs if I pay personally and reimburse myself?

If you pay a company insurance premium from your personal bank account, your company can reimburse you and still claim the expense as an allowable deduction. Record the transaction as a directors loan repayment in your company accounts. However, it is cleaner and simpler to pay all business insurance premiums directly from the company bank account to avoid unnecessary bookkeeping complications.

Need help with this for your business?

Book a free 20-minute call with one of our MAAT or ACCA qualified accountants. We will tell you honestly whether we can help.

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