Receiving income insurance, disabled and wondering about tax

IanMND

Hi all - my first post here, so hoping it is in the right place.

I've been signed off long term sick, and receiving income insurance from Zurich at 67% of my original salary. I am registered disabled, and have claimed what I believe I can in terms of benefits (such as PIP, blue badge etc).

I was wondering if anyone knows if my tax would be liable to any type of reduction - other than the fact my salary has gone down to 67% of my original salary - due to me claiming insurance and being disabled?

I'm aiming to ensure I claim everything I should, and any help would be appreciated.

Many thanks

Ian

DE_612183

is Zurich your employer or the insurance company paying income protection?

If it's the latter - I don't think you pay tax on it - but check with them.

If it's the former, then you may well pay tax on it - but at a reduced amount..

IanMND

Thanks, I should have been clearer. Zurich is the insurance provider, I don't work for them.

WabbitWabbit

Why would you not be taxed on your income even if only 67%?

I thought that everyone whose income  was above the tax thresholds currently £12,570 would pay tax including pensioner's

MyRealNameToo

IanMND said:

Thanks, I should have been clearer. Zurich is the insurance provider, I don't work for them.

The question was if it's a Group Income Protection scheme paid for by your employer or a personal IP policy you took out yourself. The former is often paid through payroll so attracts taxation whereas a personally arranged one is paid directly and doesnt have tax but then the personal one you paid for from net salary whereas the Group one would normally be a employee benefit or paid from gross salary hence the difference in treatment of the payout. 

WabbitWabbit said:

Why would you not be taxed on your income even if only 67%?

I thought that everyone whose income  was above the tax thresholds currently £12,570 would pay tax including pensioner's

If you had bought the policy yourself there would be no tax to pay but then if you bought it yourself you had paid tax on the salary that paid premiums 

Similarly if I were to run you over and put you out of work for life my insurers almost certainly would be given a periodic payment order which would pay you in lieu of the salary you would have likely of gotten had I not hit you. That too is paid outside of taxes but the figure is calculated to reflect your net pay - therefore is sort of net but doesnt factor in any changes to income tax over the next 30 years of your life etc.

sheramber

There is no reduced rate of tax for being disabled.

As you will receive reduced income your tax will less,  but still worked out with the sane personal allowances and rates. 

IanMND

Thanks for your comments and guidance everyone, really helpful. 

The Zurich policy was provided through the company I work for, not bought personally by me. 

I may have been unclear in my original question, as some people have taken something different from what I meant. I realise I am likely to be taxed on this income; I was merely asking those with more knowledge than myself whether there were any other rules that might apply in my circumstances, potentially reducing that level. I'm fine if the answer is "no", but I thought I should ask as I don't know the rules as well as those on this forum

When I referred to disability, I should have said "critical illness with short life expectancy" in case there again was a rule I was unaware of for those in my position. 

Thanks
Ian

born_again

IanMND said:

Thanks for your comments and guidance everyone, really helpful. 

The Zurich policy was provided through the company I work for, not bought personally by me. 

I may have been unclear in my original question, as some people have taken something different from what I meant. I realise I am likely to be taxed on this income; I was merely asking those with more knowledge than myself whether there were any other rules that might apply in my circumstances, potentially reducing that level. I'm fine if the answer is "no", but I thought I should ask as I don't know the rules as well as those on this forum

When I referred to disability, I should have said "critical illness with short life expectancy" in case there again was a rule I was unaware of for those in my position. 

Thanks
Ian

If you have less than 12 months to live

https://www.gov.uk/pip/claiming-end-of-life

Newcad

Just to note that if your now reduced income is not too much (and you don't  have over £16,000 in savings/captial) then you may also be able to claim UC, probably with a 'Limited Capability for Work and Work Related Activity' (LCWRA) element.

Try putting your details into one of the calculators here to check: https://www.gov.uk/benefits-calculators