LocumPlan locum insurance is a commercial or business insurance policy, designed to support your business in the event your circumstances change.
Your LocumPlan premiums should qualify as allowable deductions in the course of your business which means that if you take out LocumPlan locum insurance, then the premiums you/your practice pays should be tax deductible as a trading expense.
LocumPlan locum insurances indemnify the insured individual against business related costs such as payments to a locum to provide temporary cover whilst the insured individual is unable to work/carry on their business due to accident or sickness.
So, you/your practice should be able to deduct the cost of your locum insurance from your business profits, whenever you submit your tax return.
So, what about the tax treatment of the proceeds of a successful claim? The costs and expenses of employing a locum or the outlay for your fixed overheads are allowable under the rules for ordinary trading income. Technically, the benefits paid are treated as a trading receipt (income).
In the event of a successful claim, therefore, if the benefits paid (trading receipts) amount to more than the cost of the locum replacement and/or fixed business overheads (trading expenses), then the excess maybe chargeable to income tax.
• Always tell your accountant or, if you submit your own returns, your tax office, that you have locum insurance.
• You should always seek verification on the tax treatment of your LocumPlan locum insurance premiums and, in the event of a claim, the benefits paid out.