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HMRC internal manual

Employment Income Manual

Deductions: directors’ and officers’ liabilities: qualifying contracts of insurance: apportionment where more than one risk or person covered

Section 346(3)(b) ITEPA 2003The insurance policies with which the legislation is largely concerned will often be taken out by employers and cover different risks and different persons. For example a single policy may cover different risks and different persons:

  • the risk to an employer that he will have to indemnify an employee in respect of qualifying liabilities and
  • the risk to each employee specified in the policy that he will be subject to a qualifying liability.Since the deduction is given by the legislation to the employee, it is necessary, in strictness, to identify the part of the overall premium attributable to each employee’s risks. Accordingly the legislation provides for a reasonable apportionment. In practice, however, since the deduction will simply cancel out the charge under Chapter 10 of the benefits code (see

EIM20007) to which the employee would otherwise be subject because of the provision by the employer of the benefit of insurance cover, nothing is likely to turn on the apportionment.