Can You Get Tax Relief on Income Protection?

Claiming Your Premium Tax Relief

Claiming tax relief on your income protection premiums is easier than you might think. If you haven’t already, start by registering for Revenue’s MyAccount. Once you’re logged in, go to PAYE Services and click on “Manage Your Tax.” 

From there, select “Claim Tax Credits,” and you’ll see a section labelled “Health”—under that, you’ll find “Income Continuance.” This is where you enter your policy details to claim your tax relief. Just make sure to have your Tax Relief Certificate from your insurer ready when you’re filling it in.

Depending on how you’re set up for tax, here’s how you can claim the relief:

Company Owner – Executive Income Protection

If you’re a company owner, your company can pay the premiums directly from the business account. You don’t need to claim personal tax relief because:

• The business gets the tax relief as a deductible expense.
  
• There’s no Benefit-in-Kind (BIK) charge for you.
  

Self-Employed – Personal Income Protection

If you’re self-employed, you can claim tax relief when you submit your annual tax return. Make sure to:

PAYE Employee – Personal Income Protection

If you’re a PAYE employee, you can claim tax relief on your income protection premiums by entering your policy details through your myAccount on Revenue.ie. It’s a simple process, and you’ll be guided through each step. 

Your insurance provider should give you a Tax Relief Certificate when you first take out the policy, and then annually thereafter. Make sure to keep these certificates safe—Revenue may ask for them if they need to verify your claim. 

Important: You’ll need to send Revenue a new certificate every year to prove you’re still paying your premiums and continue receiving the relief.

What If You Forgot to Claim?

If you’ve forgotten to claim tax relief on your income protection premiums, there’s good news: you can still claim for the past four years. According to Revenue’s Four-Year Rule, you have up to four years from the end of the tax year to submit a claim for a refund. 

For example, to claim relief for the 2021 tax year, you must submit your claim by 31 December 2025. After this period, refunds for that year can no longer be processed.

Tax on the Way In vs. Tax on the Way Out

When You’re Paying Your Premiums

The good part is that you get tax relief on your premiums. Whether you’re employed or self-employed, you can claim back tax at your marginal rate (that’s 20% or 40%, depending on your income).

So you’re rewarded with a nice tax break while you’re healthy and paying into the policy.

When You’re Receiving the Benefit

Now here’s the part many people ask about—what happens if you actually need to claim on your policy?

If you ever need to rely on your income protection because you’re too ill or injured to work, the monthly payments you receive are treated as income. That means:

• They’re taxable under PAYE
  
• You’ll pay Income Tax, USC, and PRSI on them
  
• Just like you would on a normal salary
  

The reason is that you received tax relief on the way in; Revenue wants its slice if you ever receive a payout. It’s kind of like a trade-off—you save tax now, but you’ll pay tax later if you claim.

But still, when you’re out of work, having 75% of your income (even taxed) is a lifesaver compared to no income at all.

What to Do with Your Tax Refund

Once you receive your tax refund, it’s the perfect time to make that extra money work for you. Not sure where to start? Check out our blog, “9 Smart Ways to Use Your Tax Refund,” where we share practical ideas to help you make the most of your return—whether it’s saving for your kid’s education, reducing debt, or investing in your financial well-being. A little planning can turn your refund into something worthwhile.