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Tax Deductible Life Cover for businesses

22nd Dec 2023
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Relevant Life Plans provide a straightforward, cost-effective, and tax-efficient way for businesses to provide life insurance to directors and employees. They are available to any director or employee of a limited company, as well as to salaried partners of a partnership. Here we take a look at some of the benefits:

 

Benefits for the employer

  • This type of arrangement is most beneficial for Limited Company Directors who are looking to protect their families in the event of death or significant illness.
  • Also, as a valuable employee benefit it can help to incentivise and retain staff by providing death benefits to their families.
  • The net cost is typically over 40% cheaper than paying for life assurance from net income. The premiums paid by the company qualify as a tax-deductible business expense, and there are no employer National Insurance (NI) contributions on the premiums paid. (i.e. it is taxed exactly the same as a pension contribution).

Relevant Life Cover | Davenport Thomas | Happy family in the park sunset light. family on weekend running together in the meadow with river Parents hold the child hands health life insurance plan concept.
Getty Images - champpixs - Life

Director and employee benefits

  • High levels of cover (as much as 30 times remuneration) can be provided to include salary, bonuses and regular dividends.
  • The Death Benefits historically have never formed part of the pension Lifetime Allowance and are not likely to do so in the future.
  • From a tax perspective, premiums paid by the company do not count as a P11D benefit and there are no employee NI contributions on the premiums paid.
  • Relevant Life contracts are normally very flexible; if the employee leaves service, the cover is often portable to a new company or a personal policy.
  • As benefits are paid through a discretionary trust, proceeds on death do not normally form part of the individual’s estate, so the payout will be free of Inheritance Tax which means that the right amount of money is paid tax free to the right person at the right time.

 

Davenport Thomas has understood the need for Relevant Life cover for our accountancy connections and their clients over the last 18 years and we also understand the requirements for comprehensive family cover.

For a discussion about Relevant Life Plans or any other kind of protection needs, including Critical Illness and Income protection.   You can book directly into our diary here, email us or call us.
 

[email protected]  

Contact number – 0208 8192407

Calendly - David Fear

 

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The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

The Financial Conduct Authority (FCA) does not regulate Will writing, tax and trust advice and certain forms of estate planning.

 

Sources

https://www.legalandgeneral.com/adviser/protection/products/business-protection/relevant-life-plan/

https://adviser.royallondon.com/technical-central/protection-guidance/relevant-life-plan/advantages-of-a-relevant-life-plan