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HMRC internal manual

Business Income Manual

Specific deductions: insurance: employee indemnity

Premiums on a policy paid by the employer to indemnify employees against legal action taken against them personally for actions in the course of the employment are allowable as a deduction in computing the employer’s trading profits. This is because the payments are not capital expenditure (see BIM35000) and they are incurred wholly and exclusively for the purposes of the trade (see BIM37000).