Regular contributor to Tax Insider on Financial Planning, Corporate and Tax issues
You say the policy is owned by the company, not by the individual. The company is paying the premiums. If a term policy of 5 years or less and reasonable the premiums would be allowable as an expense. The proceeds would be taxable in the company. If a whole of life owned by the company the premiums are not deductible, the proceeds are not taxable, but any 'gain' is taxable. The spouse cannot be a beneficiary as the company is the beneficiary. If the company is not the owner of the policy and the director is, and the company pays the premiums then treated as salary and taxed accordingly.
re Portia Levin
EIM 30001 refers to scholarships, which is not relevant as the employer is not giving a scholarship.
The other two references refer to non training related sponsorship/ payments to minor children and do not seem to be relevant.
The SP quoted lays down specific rules to be followed for an employee (which is why I mention having an employee contract). Over the years the amount that an employer can pay an employee whilst studying in full time education has risen to £15,480 with no tax nor NI payable and the payment(s) allowable as a business expense.
Interestingly there is no mention that the course to be studied be relevant to the business, nor that family members who are employees are excluded.
The question was whether university costs are an allowable expenditure against business profits. SP4/86 lays down what is allowable within a certain level of expenditure (£15,480).
Employer funded university education
See Statement of Practice SP4/86 www.hmrc.gov.uk/legislation/sp4-86-note.html
Also EIM 06237 for the full text.
The statement of practice is an administrative easement and no further questions are asked by HRMS if you keep to within the limit.
The employee must be enrolled for at least 1 academic year
The employer can pay up to £15,480 for the academic year,including lodgings,subsistence & travel. No income tax or NI is payable on the amount. However, amounts paid for holiday or vacation time is taxable.
To date no problem either with connected persons, so long as employed by the firm with a proper employment contract before applying or going on to full time education.
See the book School & University Fees Simplified 2013/14
Premiums and personal guarantees
Thanks Stepurhan for your comment. Is there not however a case for stating that in an SME the bank would not grant the loan unless the PG was signed, meaning the director is guaranteeing a liability of the business, to enable the business to continue or expand. It could be said that the business has placed the director into this position and the business is therefore taking steps to protect the director. The benefit to the business is having the business loan which it would not have had had the director not signed a personal guarantee. The director is taking on a contingent liability of the business which could become his personal liability. Is there not a case to state that the premiums should be allowable as a business expense? One could compare D & O insurance where premiums are allowable, surely?