International student receiving disability payments from foreign private policy

Hello, I am an American citizen living in the UK on a student visa since September 2023. I have never lived, worked, or paid taxes in the UK before. I have been disabled since March of 2022 and have been receiving monthly payments from a private disability insurance policy since then. The policy is with an American insurance company and was taken out in the US in 2020. Premiums were paid for with US income. 1) Are these payments exempt from tax in the UK because they are from a private policy? 2) If not, are they exempt if I use the funds exclusively for maintenance and course fees under the US/UK Tax Treaty? 3) Do I need to file a Self Assessment to declare the income if it is exempt from tax because of either reason? Thank you for your help.

Hi

Please refer to IPTM6110 - Sickness disability and unemployment insurance: tax treatment: main rules: scope of the exemption: ITTOIA05/S735 to see if your policy meets the tax free conditions.

Thank you
 

I believe it meets the tax free conditions, but this is the part I'm unsure about. It says the payments are exempt from tax if: "the insured person (see below) did not receive income tax relief for the premiums paid for the policy: this means UK income tax, so the exemption is still available if relief has been given outside the UK against foreign taxes" I didn't receive UK income tax relief for the premium payments because when the premiums were paid I wasn't living in the UK or a tax resident here. Is that right?

Hi
Payments from non-UK policies, which are not a UK source of income, are treated in the same way as payments from UK policies. There are no special or additional conditions that must be met for the payments to qualify for the exemption so you would still qualify as tax exempt.

Okay thank you! Since the payments are not taxable in the UK then, do I need to file a Self Assessment?

Hi ejong918,
Please complete the self assessment criteria tool, to ensure that a tax return is not required for some other reason.  
Check if you need to send a Self Assessment tax return.  
If the tool confirms that a tax return is not required, you do not need to register for self assessment.
Thank you.
 

Hello, Thank you for your assistance. It seems I do not need to file a Self Assessment. If for some reason this is incorrect and my disability money was taxable, is it exempt under the US/UK tax treaty since I am a student? All of my money has been going toward my tuition and rent/ living expenses.

Hi ejong918,
As long as it is under £15,000 then you do not need to do anything.
Thank you.