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Jul
24th

RELEVANT LIFE POLICIES By: Clare

It makes sense to protect a business by providing life cover in the event of the death of the business owner. A relevant life policy is a life plan, taken out on the life of an employee by an employer to provide death in service benefits. This type of policy is ideal for protecting directors who work day to day in a business as they qualify as employees. A relevant life policy will usually be a cheaper and possibly the only way of providing life cover for these small businesses. It is also cheaper than the individual entering into a contract personally.

The plans are restricted to providing life cover only and cannot contain a waiver, critical illness or income protection benefits. They must cease before the employees 75th birthday.

Policy premiums are paid by the company, which are usually an allowable deduction, without being treated as a benefit in kind.
Payments are treated as a business expense, thereby reducing the corporation tax liability.
There is no national insurance liability for employer or employee
No liability to income tax for the employee.
Benefits paid are tax free if paid to the nominated beneficiary
Payments for not form part of an individual’s annual or lifetime allowance.

For more details please contact us at Haxton Chartered Accountants.

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