If the worst happens and you do need to claim on an insurance policy you need to be aware that the proceeds are likely taxable. Insurance proceeds are normally to replace something that is lost.
Rent
If you receive proceeds to replace lost rent the insurance proceeds are taxable just as the rent would have been. Nice and simple.
Damages
If you get insurance to replace something lost or damaged then the proceeds are again taxable. The money received should be included in with your gross rents and the costs of replacing or fixing the damaged item are an expense. So if you get £3,000 to carry out a repair and spend that £3,000 on the repair then you will have no increase in taxable income. Nice and simple.
This one gets interesting if you receive proceeds but then do the work yourself. If that happens the income is still taxable and you will have no deduction for your own labour. Materials bought would of course be a cost. You will essentially be taxed on the proceeds used to cover your own time. If you are self employed you could submit an invoice for your own time but of course you’d then simply have to include that income within your self employment. The net result is you will still pay tax on the income.
Some people have competes they use to do works and if that is the case with you then the money would be taxed within the company and you personally would get a deduction against rents but only if the work is done at normal commercial rate.
Capital
If the damage to the property is so large it affects the value of the property it will be taxed as a capital receipt. Let’s say a tree falls and significantly damages the property. If this happens you will need to consider the rules for part disposals within capital gains tax. These are pretty complex so I won’t cover them here but you could result in a capital gain which will probably come as a complete surprise.
Summary
Don’t ignore insurance payouts when preparing your tax returns!