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Life Insurance - P11D benefit?

Hi all

It was always my understanding that if an employer is the beneficiary of a life insurance policy then no P11D benefit will arise.   Likewise, f the employee is the benificiary then it's a taxable benefit which should be reported on form P11D.

I've just found the following on Tolley's..........

Although not strictly health insurance, it is worth mentioning the tax rules on the provision of life insurance by the employer.  As long as the employer arranges the life insurance and pays the insurance provider direct,  the provision of life insurance is not a taxable benefit on the employee.

ITEPA 2003, s 307 

Does this mean that the beneficiary of the policy doesn't affect the treatment either way and life insurance is always a non taxable benefit??  I'm very confused!



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23rd Jun 2012 21:57

Who is liable for the premiums
If the employer is liable for the premiums and is the beneficiary of the policy there is not a benefit to an employee.

If the employee is the beneficiary of a policy arranged and paid directly by the employer, there is a benefit but s307 exempts this.

If the policy is arranged by the employee though, with the company then picking up the bill by either reimbursing the employee or paying the insurer directly, then there is a benefit (not an exempt one) as the company are paying for a personal liability.

I suppose if employee was liable for the premiums and the employer paid then there would be a benefit to the employee here too, but I think this scenario would be pretty uncommon.

I think that's right... I am sure someone will correct me if I am wrong.

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02nd Jul 2012 13:45

Relevant Life Policy

The rules as different for a relevant life policy. With this plan the company can pay the plan and the beneficiaries can be the employees dependants. No P11D arises and this make relevant life policies very tax efficient.

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By mohan1
02nd May 2013 15:23

HMRC's view seems to be that it is a benefit in kind


Also, HMRC's booklet 480 (2013) says:

1.23 [Sections 201(3) and 117]


Where expenses payments are made to, or benefits are provided for, an employee or members of the employee’s family or household by the employer they are deemed to have been made or provided by reason of that employment - they are regarded as part of the reward for the job

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