Are Medical Insurance Payouts Taxable Uk. When you receive the money from your critical illness insurance claim, the funds you receive are not counted as income and are therefore not taxable. So you do not need to worry about paying any kind of income tax or capital gains tax on these amounts.
This means for you as an employee it’s a taxable benefit resulting in a larger income tax bill. In other words, the person or people who receive the payout do not automatically have to pay tax on the money. Health insurance does not usually pay out sums of money to policyholders directly.