HMRC's internal guidance concerning insurance is contained in BIM45500 onwards.
The statutory prohibition on deductions for sums recoverable under a contract of insurance or indemnity1 follows ordinary commercial principles. The cost of maintaining an insurance policy in respect of loss or damage to the trade and its assets is an ordinary expense of the trade and is deductible as such.
Annual premiums on policies providing indemnity for damage to or loss of fixed assets (including intangible assets) are allowed as a deduction, provided they are incurred wholly and exclusively for the purposes of the trade. A deduction is available even if the policies cover replacement 'new for old', and not merely damage to or loss of the assets in their depreciated state2.
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