Relevant Life Cover
Tax Deductible Life Insurance
Are you a shareholder / Director of your own Ltd Co?
Do you draw a PAYE salary from your Ltd Co?
Do you want to have tax efficient life insurance for you and / or your employees?
If the answer is yes, you may be entitled to arrange a Relevant Life Cover policy.
What is relevant life cover?
- An individual death in service life assurance, written in trust to beneficiaries nominated by the policy holder.
- The cover is personal to directors and their employees, however the policy may count as a business expense and is therefore tax deductible.
- Because the premiums are paid through the company the plan is designed to meet certain legislative requirements that mean your premiums, benefits, and options should be treated tax efficiently
- If the covered person dies or is terminally ill the company receives a fixed one-off lump sum
- Must be an employee of the business (which includes salaried company directors.)
- Excludes sole traders, equity partners of a partnership, and equity members of a LLP
- Single life cover (no option for joint cover)
What makes this cover so great for company directors?
- Premiums are normally considered as a business expense and are therefore likely to be allowable for a corporation tax deduction
- Premiums and benefits don’t count towards your lifetime pension allowance – important if you have a large pension fund or what to maximize your pension contribution
- Cost effective way to provide life insurance to your employees
- Payouts should be free of UK income tax and capital gains tax.
- Benefits paid through the plan do not form part of the estate of the employee in regards to inheritance tax
- Date of birth
- Male / female
- Smoker / non-smoker
- Level of cover required (£250,000 for example)
- The term of the policy (15 years for example)