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HMRC internal manual

Property Income Manual

Deductions: general rules: insurance premiums


Premiums on insurance policies covering the risks listed below will be allowable if paid for the purposes of the rental business.

  • the risk of damage to the fabric of the property,
  • the risk of damage to the contents,
  • loss of rents.

Allowable deductions will include premiums in respect of properties that are held for letting but vacant for the time being, as well as properties that are let.

Insurance recoveries

Amounts recovered under such policies should be dealt with as follows:

  • Insurance recoveries in respect of damage to the property should normally be set against the cost of repairs to make good the damage. But see PIM2020, which indicates that sometimes the right result may be achieved by deducting the expense when it is incurred and crediting the insurance recovery as a receipt when it is received.
  • Insurance receipts in respect of loss of rents - see below - are taxable as income of the rental business.

Loss of rents

The kinds of risks for which it may be accepted that premiums for loss of profits insurance may be treated as a deduction are set out in BIM45510. If the premiums are allowable, then the receipts are taxable. The principles of the Tax Cases referred to in that paragraph now apply equally to rental businesses.