A slightly solemn blog post today, but it is a subject of utmost importance. Life cover is something we all know is essential, but something none of us really want to think about. It’s not a nice subject, but the sooner you get it sorted and out of the way the better.
Now, if you’re a company director, things can start to get a little tricky. Not only do you need to make provisions for your loved ones, but there is also the matter of your employees too. Some intricate tax issues can arise when providing death in service benefits to your staff who are high earners and have a large pension fund. You might have also considered a group scheme, but if you’re company is too small, this might not be an option. So what is there to do?
Well, there is the option to take out a Relevant Life Policy which can be a much more tax efficient way to ensure that your loved ones will be looked after properly and the same can be said for your employees too. So, if your number of employees is too low for a group scheme, or the Company scheme is just not enough, a Relevant Life Policy is probably going to be something you should look into.
It ends up being more tax efficient for the company paying out through this method than employees paying into their own life insurance schemes. If you’re a company director who gets their wages through Pay As You Earn, you’ll likely to be eligible for this and be able to make strong provisions for your loved ones.
Here’s a few of the reasons why it’s worth considering taking out a Relevant Life Policy:
- You and your employees won’t be liable for National Insurance
- Nominated beneficiaries receive their benefits tax free
- Your policy premiums will be considered a business expense and therefore can be deducted against Corporation Tax
- No Income Tax liability for your employee
- The benefits received from the life cover don’t affect the individuals allowance for lifetime pension savings
- The policy premiums don’t form part of your annual allowance for pensions contributions
So, as you can see, there are plenty of benefits to taking out a Relevant Life Policy, especially if you’re a company director with a small company. You can end up saving yourself a fair bit of cash, and the payout for your loved ones will be affected by less tax rules as well. It’s a great way to ensure the best for yourself and your beneficiaries.