I am considering taking out an Income Protection policy, to cover income in the event of illness. What this be categorised as Insurance in QF?
If it’s a tax deductable expense (Not sure about that?) you can tag to the insurance nominal code (8204).
With a personal plan tax is paid on the premiums (which are paid from after-tax earnings) and the benefit is tax free, however, with an executive/directors plan the premiums can usually be expensed but the benefit paid out will incur income tax and national insurance contributions.
Need to insure the income tax liability
Thus, with an executive plan the insurers will usually allow you to cover up to 80% of gross earnings rather than up to 60% with a personal plan. This is because you would need to insure a higher amount to cover the tax.
Essentially, with an executive plan the business takes out the plan and pays the premiums on your behalf but any benefit paid out would be paid to the business, which would then pay you via the Pay As You Earn (PAYE) system