Relevant Life – Get the tax man to pay for your insurance
A Relevant Life Policy is a single life plan, taken out on the life of an employee by an employer to provide a lump sum in the event of their death. They are designed for individual members who may require life cover over and above that of the main company scheme already available to them or, where the number of employees is too low for a company group scheme. The cover can be in place till the employee’s 75th birthday and terminal illness can also be covered under this plan.
Directors working day to day in a business are likely to qualify as employees so they can potentially benefit from this more cost effective way of providing life cover.
THINGS TO KNOW:
• Tax advantages for higher earners.
• Premiums not taxed as benefit in kind.
• Clients aged 40+ can usually cover themselves for 15X remuneration.
• As an individual cover, policies can be transferred if you leave the company.
• Even though the premiums are classed as a taxable expense, the pay-out itself will not be included in the employees taxable estate.
This table is based on a monthly premium of £50 (£600 Annually) and all taxes at their lowest rates:
|Ordinary Life Policy||Relevant Life Policy|
|Employee National Insurance – £105.88||Corporation Tax relief – £120.00|
|Employee Income Tax – £176.47||Net Costs – £480.00|
|Employer National Insurance – £121.76|
|Corporation Tax Relief – £200.82|
|Net Costs – £803.29|
Total Saving of 40%
Information regarding taxation levels and basis of reliefs are dependent on current legislation, individual circumstances , are not guaranteed and may be subject to change
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE