How Do I Value My Company Shares for Shareholder Protection Insurance?
Question asked by Gurbaag Chadda
I’m in the process of setting up my own business. I haven’t hired any employees yet, but I plan to.
I’m aware that a Workplace Pension Scheme is a mandatory requirement. But I’ve also been told about Death In Service Insurance and how it’s apparently a mandatory benefit too. Is this true?
Quite simply, no. You don’t have to set up Death In Service Insurance for your employees. It’s entirely down to you as the employer, as it’s not a mandatory benefit in the UK.
That said, there are many good reasons why you should consider setting it up. Here are some of those benefits:
As a new small business, the Employee Benefits you choose to set up can do wonders for helping you to attract the very best talent. They can also help ensure your staff stay long term.
In our 2023 Employee Benefits Survey, we discovered that:
Listening to what your employees’ want can help you recruit new staff and keep your current staff. Failing to meet their needs may result in them looking for employment at another organisation with better benefits.
Oftentimes, cost is a barrier for companies wanting to provide valuable employee benefits. The good news is that Death in Service is actually one of the most affordable benefits you can offer. It also comes with great tax relief for you and your staff.
As the employer, you aren’t required to pay corporation tax on the premiums you pay on behalf of workers. HMRC views it as a business expense, meaning the company corporation tax bill will be reduced.
And for your employees? Death in Service is not a taxable P11D / Benefit in Kind.
What’s more, if the policy is set up under a trust, the payout isn’t liable for Inheritance Tax. The Death in Service benefit the employee’s loved ones then receive is usually a tax-free lump sum.
With personal Life Insurance, the insurer will ask about the member’s health history. This is to determine the cost of the policy and exclude any pre-existing conditions.
But with Group Life Assurance, staff don’t need to provide any medical information. This enables all of your employees, regardless of their health status, to get cover.
It also removes the financial barrier associated with buying a Life Insurance policy. Even more so if an employee has a medical history that would have increased the costs if they bought a personal plan.
Insurers underwrite the vast majority of staff on a group basis, so it’s easier for them to secure cover.
For expert advice on your Small Business Employee Benefits, please don’t hesitate to get in touch. You can give us a call on 02074425880 or email help@drewberry.co.uk..
Our advisers can do the heavy lifting for you. They can make sure the policy is set up correctly and meets the needs of your business.