Are you a company director? Have you been prudent and taken out life assurance cover to protect your loved ones? Or are you thinking of doing so?
If so, you might not be doing this in the most tax-efficient way. If you pay for this cover from your own bank account, you will be paying from post-tax income, and if you are paying from a business account you will probably be taxed as if it was income.
Larger companies can put in place tax- efficient “group death-in-service cover†as a way of providing life assurance, but very few insurers offer a business cover for only one or two employees.
However, changes in legislation means that smaller companies can now benefit by taking out ‘Relevant Life policies’. These can be set up on an individual basis and are available to all companies, no matter how small. The tax benefits are:
- Premium payments are made by the company and this does not constitute a benefit in kind
- No National Insurance implications
- Potential tax relief as a business expense, depending on your individual circumstances
- Tax-free benefits to your dependants
- Unlike a registered group scheme, the benefit won’t form part of your annual or lifetime pension allowance
This is a valuable tax-efficient option for family life assurance protection, and one that you may now wish to consider. However, it is apparently little known. Research by Legal & General (Business Protection Report, March 2015) found that only 28% of businesses had heard of Relevant Life policies. Jelf can of course provide assistance if required.
To discuss this further please contact us at Jelf Individual Protection Team on 01454 525333 or email ipu@jelfgroup.com.lifelife as
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