How Much Tax Relief Do You Get With a Relevant Life Policy?

I run my own limited company as a company director and need Life Insurance. I’ve been told I can save tax running Life Insurance through my limited company.

How much tax relief is available on company director Life Insurance? Is it worth buying a Relevant Life policy over personal Life Insurance?

Question asked by Anne Bloomfield

You do indeed get tax relief on Director Life Insurance, also known as Relevant Life Insurance.

This is usually significant for most company directors, particularly higher or additional rate taxpayers taking the majority of their income as dividends.

The table below firstly illustrates the cost of a personal Life Insurance policy for a higher rate taxpayer drawing most of their income as dividends. Alongside that is the cost of a Relevant Life Insurance plan for the same person.

With Relevant Life Insurance:

  • It’s paid for from pre-tax company income, so corporation tax relief is available.
  • There’s no employer or employee national insurance contributions to worry about.
  • Given you pay for a personal policy out of income HMRC has already levied income tax on, and there’s no personal contribution to a Relevant Life policy, there’s also income tax savings, too.

The Tax Savings

As you can see from the table, the saving stands at almost 50% once all of the tax reliefs are taken into account.

Personal Life Cover
Relevant Life Cover
Cost to Individual
Monthly Premium
Employee NI Contribution
Income Tax
Cost to Business
Employer NI Contributions
Gross Cost
Corporation Tax
Total Cost
Total Savings


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