Employee liabilities and indemnity insurance
Definitions or restrictions
You contract directly with a legal firm or insurer to cover either
of the following:
- costs to an employee that arise from legal action taken against
them for wrongful acts or omissions in the course of their work
- the cost of indemnity insurance for your employee to cover any
costs that arise from such legal action
The rules in this area are complex. To go direct to detailed guidance about when relief may be due, so that you can apply for a dispensation, follow the links in the 'Technical guidance' section below.
What to report, what to pay
For employees earning at a rate of less than £8,500 per year, you
have:
- no reporting requirements
- no tax or National Insurance contributions (NICs) to pay
For company directors or employees earning at a rate of £8,500 or more
per year:
- report on form P11D - section M - unless you have a dispensation
covering this item
- you have no tax or NICs to pay
Work out the value to use
The value to use is the total cost to you of the legal or insurance expenses for each employee.
How a dispensation can reduce
your expenses and benefits reporting
Technical guidance
EIM30500: Directors'
and officers' liabilities
NIM05660: Employee liability
insurance
