Income Tax (Trading and Other Income) Act 2005 section 736

Health and employment risks and benefits

Section 736 defines what constitutes a "health risk" and an "employment risk" for the purposes of the tax exemption for health and employment insurance payments, and clarifies that insurance benefits need not be paid as indemnities to qualify.

• A health risk covers insurance against the policyholder suffering any physical or mental illness, disability, infirmity or defect, or any deterioration in a condition resulting from such illness, disability, infirmity or defect
• An employment risk covers insurance against circumstances causing the policyholder to cease being employed, to lose an office, or to stop carrying on a trade, profession or vocation
• Insurance against a risk includes policies that pay benefits otherwise than by way of indemnity — so the exemption is not limited to policies that merely compensate for a specific financial loss
• These definitions apply across the related provisions in sections 735 and 737 to 743, which together set out the conditions for the tax exemption on health and employment insurance payments