Taxation of Chargeable Gains Act 1992 section 205

Disallowance of insurance premiums as expenses

Section 205 provides that insurance premiums paid to cover an asset against damage, loss or depreciation cannot be deducted as allowable expenditure when computing a chargeable gain on disposal of that asset.

• Insurance premiums and other payments under an insurance policy relating to an asset are not allowable deductions for capital gains tax purposes.
• The disallowance covers insurance against any kind of damage, injury, loss or depreciation of the asset.
• This rule applies in addition to the general rule in section 39 which excludes expenditure that is deductible for income tax purposes.
• The effect is that the cost of insuring a capital asset cannot reduce the chargeable gain when the asset is eventually disposed of.