Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Business Income Manual

From
HM Revenue & Customs
Updated
, see all updates

Specific deductions: insurance: loss of profits

Premiums on policies insuring against loss of profits from the following contingencies are allowable deductions in computing trading profits:

  • a fire at the business premises (as happened in the Canadian case of British Columbia Fir and Cedar Lumber Co Ltd [1932] AC 441)
  • interruption or loss of use of income-producing assets such as business premises or plant and machinery
  • interruption or cessation of the supply of raw materials, stock, water supply, fuel etc needed to carry on the business
  • events causing loss of profits for a temporary period (see Mallandain Investments Ltd v Shadbolt [1940] 23 TC 367)

Guidance on policies insuring against loss of profits resulting from the death, sickness, accident or injury of an employee or director (including ‘keyperson’ policies) is at BIM45525 onwards.