Relevant Life Insurance is one of the most tax-efficient ways of providing life cover for an employee/director of a company. The premiums are paid for by a company and Relevant Life cover is often considered a tax-deductible business expense (providing you meet strict conditions when setting up the policy).
A company director in the 40% tax bracket could make significant savings on life cover by opting for Relevant Life Insurance over personal cover, because the tax-efficiency of Relevant Life Insurance means it works out cheaper than a personal life insurance plan. The Drewberry Relevant Life Calculator below will help you calculate how much you could save with Relevant Life Insurance.
Relevant Life Insurance is a form of Life Insurance paid for by a company, with the families of directors/employees as the beneficiaries of the policy. The company does not receive any of the payout from a Relevant Life Insurance policy – a company looking for such cover should consider Keyman Insurance, which is different from Relevant Life cover.
Relevant Life cover is usually an allowable business expense and can be deducted from companies’ corporation tax bills. The Drewberry Relevant Life Insurance Calculator can show the potential savings you and your company could see from using Relevant Life cover, especially if you’re currently paying for Life Insurance out of your own pocket.
Also, as policy is written into a relevant life trust, the beneficiaries receive the payout from Relevant Life Insurance tax-free.
Moreover, Relevant Life Insurance premiums are not treated as a P11D benefit and don’t have any National Insurance implications for either the employee or the employer. Drewberry’s Relevant Life Insurance Calculator will take into account all of these deductions for you.
Remember, for Relevant Life Insurance to retain its tax-efficient status, strict conditions need to be met to keep HMRC happy.
There must be no Critical Illness Insurance attached to the Relevant Life policy, and the primary aim of setting up the cover can’t be seen to be tax avoidance.
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Providing all those conditions are met, though, Relevant Life cover can be an incredibly tax-efficient method of providing life protection. It can offer:
If any of the above apply to you, then it’s worth calculating the cost of Relevant Life Insurance to work out how much you could save.
Relevant Life Insurance offers corporation tax relief, no implications for National Insurance contributions for either the employer or the employee, and tax-free payouts to beneficiaries.
That means calculating the cost of Relevant Life cover compared to personal or ‘normal’ life cover is mostly a series of deductions! Why not try the Drewberry Relevant Life Cover Calculator to see what you could save?
Now you’ve calculated the cost of Relevant Life Insurance and found out how much you could save the next step is ensuring you keep all of those tax advantages.
There are a number of pitfalls that you mustn’t fall into to keep you on the right side of the HMRC rules for Relevant Life Insurance and retain its tax-efficient status. Our expert financial advisers are best-placed to help you navigate this area and set up the policy for you, including the necessary relevant life trust.
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